Brazauro Resources‘ (BZO-V) flagship Tocantinzinho property in the heart of north-central Brazil’s remote Tapajós region, has the potential to produce 145,000 oz. gold a year and yield an internal rate of return (IRR) of about 12%, the company says.
An updated preliminary economic assessment indicates Tocantinzinho will have a 13-year mine life based on a processing rate of 4 million tons per year. Average operating cash costs are forecast to be about US$490 per oz. with a net present value (NPV) of US$129 million using a 5% discount rate and a US$900 per oz. gold price. Capital expenditures of US$239 million are anticipated to take 6.25 years to pay back.
Brazauro’s 100%-owned Tocantinzinho is one of the company’s five properties in the Tapajós district, one of the largest gold provinces in Brazil. The Tapajos mineral province encompasses the Tapajos River and its drainages. Local miners or garimperiros have been gold mining there for the last forty years.
The Tapajós province is situated in Central Amazon and is a part of the large Amazon Craton. In the North, it is bounded by the Amazon Basin near the town of Itaituba, and in the south by the Cachimbo Graben.
Brazauro’s latest PEA builds on an earlier one published in December 2007 and includes a detailed mine plan, enhanced engineering studies and budget proposals from suppliers for key elements of the mine development, including providing power to the site.
It was also based on an updated resource estimate released in December 2009. Tocantinzinho is estimated to have measured and indicated resources of 51.4 million tons grading 1.14 grams gold per tonne for 1.89 million oz. contained gold, and additional inferred resources of 12.4 million tonnes at an average grade of 0.98 gram gold for 389,000 oz. gold.
If an average gold price of US$1,100 per oz. is used, the IRR calculation jumps to 20.6% with an NPV of US$585 million and US$328 million at 0% and 5% discount rates, respectively.
Brazauro discovered the property in 2004 and by October 2009 had punched 159 holes into the ground (45,065 meters). Of these, 139 delineated a gold zone measuring roughly 700 meters long by 150-200 meters wide and more than 300 meters deep, averaging 1.11 grams gold per tonne. The mineralization remains open at depth.
In mid-2008, Brazauro signed an option agreement with Eldorado Gold (ELD-T), in which Eldorado can earn up to 75% of the project and a position in Brazauro for a total of $123 million in expenditures and cash payments. That included a private placement of 8.8 million Brazauro shares at 95¢ per share for $8.36 million.
Over the last two years Eldorado has spent more than $9.5 million on the project.
At presstime in Toronto Brazauro was trading at 63¢ per share; the Houston-based junior has a 52-week trading range of 35¢-75¢and 85.2 million shares outstanding.