Bonterra lifts Barry gold project value to $665M

A new study raises the value of Bonterra Resources’ (TSXV: BTR; US-OTC: BONXF) past-producing Barry gold mine in Quebec almost 14 times under an expanded plan and a much higher assumed gold price.

Barry, a joint venture with Gold Fields (JSE, NYSE: GFI), has an after-tax net present value (NPV) of $665 million (US$465 million) at a 5% discount rate, an internal rate of return (IRR) of 54% and a 2.5-year payback, Bonterra said Wednesday.

The new preliminary economic assessment (PEA) includes underground operations alongside an open pit. It compares with a 2022 PEA that estimated Barry’s NPV at $48.3 million with a 5% discount rate, the IRR at 43% and the payback at 3.4 years.

“Initial economics from Barry confirm the asset’s production potential and provide visibility into Bonterra’s potential growth roadmap,” ATB Cormark mining analyst Richard Gray said Thursday in a note.

The new study is predicated on a long-term gold price of US$3,500 per oz., compared with US$1,600 in the earlier study.  It draws on a February 2026 resource.

Earn-in

Gold Fields, which may earn 70% of the project this year in a program to invest $30 million, hasn’t endorsed the PEA. The study doesn’t represent an approved development decision, Bonterra said.

Located in Quebec’s Abitibi Greenstone Belt, about 700 km north-northwest of Montreal, Barry produced about 44,000 oz. gold between 2008 and 2010. Bonterra subsequently built an underground exploration ramp that extends to a depth of about 100 metres.

Bonterra is targeting nearly 697,000 oz. gold over a 7.2-year mine life, compared with 145,050 oz. in the 2022 open-pit-only plan. Average annual production is projected at 87,097 oz., nearly three times the previous estimate of 30,000 ounces.

The new plan requires $119 million in initial capital, compared with $22.1 million previously. Sustaining capital is estimated at $354 million and site closure costs at $7.3 million for total capital costs of $480 million.

Operating cash costs are forecast at $2,411 per oz., while all-in sustaining costs are estimated at $3,017 per ounce. The development scenario assumes the ore would be processed at a nearby third-party mill, rather than at a new processing plant built for Barry.

Open at depth

Some 8.4 million tonnes of ore grading an average 2.79 grams of gold per tonne would be mined at Barry, with an estimated 93% recovery rate. Open-pit mining would account for 4.9 million tonnes of material, while underground operations would contribute 3.4 million tonnes at a higher average grade of 4.05 grams per tonne.

At the base-case assumptions, the project is expected to generate $1.18 billion in pre-tax cash flow over its mine life, including $827 million in after-tax free cash flow.

Barry holds 11.9 million measured and indicated tonnes grading 2.29 grams gold per tonne for contained metal of 874,000 oz. gold, according to the February resource. It also holds 8.9 million inferred tonnes grading 3.41 grams gold for 972,000 oz. of contained gold.

Bonterra’s new PEA incorporates about 40% of the contained gold ounces from the February resource. The Barry deposit remains open at depth and mineralization has been identified over 100 metres beyond the current resource boundary, “leaving meaningful exploration upside for future updates,” Gray said.

Joint venture

The Barry joint-venture agreement gives Gold Fields the controlling stake by spending a minimum $10 million annually over three years.

As of May, more than 88,000 metres had been drilled at Barry.

Bonterra shares were unchanged at 13¢ Thursday morning in Toronto, valuing the company at about $50 million. The stock has traded between 12¢ and 25¢ in the past year.