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Egan Street revises Rothsay gold project scoping study with 8% discount rate

Egan Street Resources Ltd. said Dec. 23 that it revised the results of a recent scoping study for its Rothsay gold property in Western Australia.

The revised study uses an 8% discount rate while the previous version used a 5% discount rate.

Based on a gold price of A$1,600 per ounce and an 8% discount rate, Rothsay is expected to generate free cash flow of about A$26.8 million. The proposed development has a net present value of A$18.6 million with a 40% internal rate of return, all on a pretax basis.

The project will require initial CapEx of about A$20.4 million, with a 1.8-year payback period.

The original study was released earlier in December, estimating a net present value of A$21.4 million, using a 5% discount rate, with life-of-mine pretax operating cash surplus of A$26.7 million from revenue of A$161 million.

The Rothsay property is expected to produce 101,000 ounces of gold over an initial 3.75 years for a capital outlay of about A$20.4 million and life-of-mine all-in sustaining costs of A$1,056 per ounce.

The company, whose shares started trading on the ASX in September, has started a feasibility study on the project that will incorporate a new resource estimate slated for completion in the first quarter of 2017.

Egan Street expects to complete the feasibility study in the third quarter of 2017.