Mpokoto gold project looks attractive, Armadale says

7th Apr 2014 12:50

AIM-listed resources investor Armadale Capital said that there was strong potential financial returns from a scoping study at the Mpokoto gold project, which has shown it to be a robust and low-cost development. The project, in which Armadale has the right to an 80% interest, is located in the Katanga Province of the Democratic Republic of Congo.The group said the project returns were "attractive", even at a gold price of $1,100 per ounce. The post-tax net present value was $33m, based on a discount rate of 8%, a gold price of $1,250 per ounce and an internal rate of return of 141%. The group said total capital expenditure was estimated to be $20.2m, with operating costs of $649 per ounce.Justin Lewis, Director of Armadale, said: "The study shows Mpokoto is an attractive gold development project, offering highly attractive returns, near term production potential, with robust economics even at low gold prices. Its positive returns should be further underpinned through the upside potential given that this stage one scoping study is only based on a fraction of the total known mineralisation."We are now focussed on advancing Mpokoto to the next stage of its development before targeting commercial gold production. Stage two of the study will commence shortly and focus on the less weathered ore below 30m, which is expected to further add to the overall value of the project."The share price dropped 8.83% to 0.132p by 12:46 on Monday. NR