TG Metals has outlined a preliminary A$26.8 million pre-tax NPV for a low-capital heap leach operation at its Van Uden Gold Project in Western Australia. The economics are striking, but the study remains an early-stage assessment reliant on further drilling, approvals, financing and technical work.
- A$26.8 million pre-tax NPV and 121.7% IRR
- A$14.2 million development capital for an initial three-year operation
- Approximately 13,630 ounces of recovered gold at 90% recovery
- A$15 million funding requirement remains unresolved
- No Ore Reserve declared and study accuracy limited to approximately ±35%
Van Uden study points to rapid payback
TG Metals Limited (ASX:TG6) has put a surprisingly large headline valuation on a small proposed gold operation, with a scoping study estimating a pre-tax net present value of A$26.8 million and an internal rate of return of 121.7% for a heap leach development at Van Uden in Western Australia. The proposed operation would require A$14.2 million in development capital, including contingency, and has an estimated pre-tax payback period of 12.1 months from first production.
The study models a 250,000-tonne-per-year operation processing near-surface laterite through crushing, screening, agglomeration and heap leaching. Over the initial roughly three-year mine life, TG Metals expects to process 766,311 tonnes of ore grading 0.61 grams per tonne gold, recover about 13,630 ounces at a 90% recovery rate and generate A$83.2 million in net revenue after state and private royalties. Pre-tax project cashflow is estimated at A$32.9 million after capital costs, while pre-tax operating cashflow is approximately A$48.3 million.
Low strip ratio supports the proposed mine plan
The project’s appeal rests partly on its simplicity. The laterite is at or near surface, is expected to require no drilling or blasting, and sits within shallow pits with a forecast strip ratio of 0.6:1. TG Metals has assumed average all-in sustaining costs of A$2,835 per ounce, with mining planned through contractors and processing based on established agglomerated heap leach technology.
The financial model assumes a gold price of US$4,400 an ounce and an AUD/USD exchange rate of 0.70. Those assumptions are material to the result, as are diesel costs, labour availability, recovery performance and the timing of production. The study has an estimated accuracy of plus or minus 35%, making the headline NPV a preliminary project estimate rather than a settled valuation.
Metallurgy is encouraging but unfinished
Metallurgical testwork provides the main technical support for the proposed process, although it is not yet complete. Two four-metre columns returned gold extractions above 95%, while a two-metre column recorded 81.3% with leaching still underway. Residue analysis also remains outstanding, so TG Metals has adopted a 90% recovery assumption for the study rather than relying on the strongest individual results.
The resource base currently contains about 1.1 million tonnes at 0.52 grams per tonne gold for 17,700 ounces, with the company identifying a further 62,400 ounces of transitional material as potentially suitable for heap leaching. Drilling is underway beyond the current laterite resource, and TG Metals is also assessing taller heaps, larger-scale development and the possible inclusion of transitional material. None of that upside is included as established production in the current study.
Funding and approvals remain the critical hurdles
TG Metals says early discussions have begun around non-dilutive financing, but the company also warns that roughly A$15 million will likely be required to achieve the study’s projected outcomes. There is no certainty that a non-dilutive solution will be secured, and the announcement explicitly flags the possibility that future funding could be dilutive or otherwise affect existing shareholders.
The project must also move through a Pre-Feasibility Study, resource expansion, environmental and geotechnical work, water licensing and regulatory approvals before it can become a mine development proposition. A groundwater assessment is required to establish sustainable bore yields, while the proposed in-pit storage of spent heap leach residue still needs further testing for seepage, containment and long-term environmental performance. The study declares no Ore Reserve and should therefore be read as an economic case to investigate, not as evidence that production is assured.
Bottom Line?
The numbers make Van Uden look compelling on paper, but the next value test is whether drilling, approvals, funding and incomplete metallurgical work can convert a high-return scoping study into a financeable development.
Questions in the middle?
- Can TG Metals secure the approximately A$15 million required without materially diluting existing shareholders?
- Will expansion drilling add enough laterite inventory to extend the short initial mine life?
- Do final metallurgical, water and residue studies support the assumed 90% recovery and heap leach design?