Latitude scoping study reveals economic gold-cobalt operation in Finland

Latitude 66 scoping study highlights economic gold and cobalt operation at KSB project in Finland.

The company says the project is well positioned to support the Critical Raw Materials Act with the potential supply of a significant level of cobalt into the EU. Pic: Getty Images.

• LAT releases scoping study for KSB gold-cobalt project in Finland

• Study details economic standalone gold-cobalt production

• Company will look at expansion opportunities in PFS

 

Special Report: A scoping study by Latitude 66 for the KSB gold-cobalt project in Finland highlights an economic, standalone operation with expansion potential.

Gold production is expected to underpin the economic stability of the cobalt supply with the metal defined as a strategic mineral under the Critical Raw Materials Act (CRMA) and a critical mineral by NATO, essential for batteries, defence and aerospace components.

The study was based on the existing mineral resource base of 7.2Mt at 2.7g/t gold and 0.08% cobalt for 650,000oz gold and 5,840t cobalt using conventional, low-risk open pit mining and free-milling gravity and Carbon in Leach (CIL) processing.

For context, the annual cobalt production alone is expected to account for around 25% of the extracted cobalt from the European Union.

The study has confirmed the potential of the project to be a highly economic, low-cost, gold-cobalt mine with robust base case economics over a 7.2 year mine life and average annual LOM production of about 65,000oz gold and 465 tonnes cobalt.

It estimates low operating costs with all-in sustaining costs (AISC) of US$1,038/oz gold (US$996/oz gold equivalent) and low capex estimate of US$100 million with a 16 month payback.

Base case post-tax NPV is estimated at US$310 million and post-tax IRR is 74% at US$2,500/oz gold.

“Latitude 66 is extremely pleased with the strong economics demonstrated by the KSB project scoping study which shows with modest pre-production capex of approximately US$101m, a Net Present Value (NPV) greater than US$300m can be achieved and an excellent Internal Rate of Return (IRR) of more than 70%, based upon the currently defined mineral resource estimate,” Latitude 66 (ASX:LAT) managing director Grant Coyle said.

However, at the spot price, that post-tax NPV jumps to around US$433 million and the post-tax IRR becomes 98% at US$3,000/oz gold.

Expansion potential on the cards

The scoping study is based on conventional open pit mining initially across K1, K2 and K3 deposits with free milling CIL and flotation processing plant operation, and 90% of production from the indicated resource category.

There’s also plenty of low capex expansion opportunities, with future work to include:

• Drilling near-mine extensional targets identified down-dip and along strike of the K1 indicated and inferred resource;
• Drilling to test regional resource expansion potential initially at nearby highly prospective K6E and K6W prospects; and
• Environmental best practise measures and optimisation targeting a carbon neutral operation.

“The project has significant upside potential due to highly prospective nearby exploration potential and low capex expansion options,” Coyle said.

“Latitude remains committed to developing the KSB gold-cobalt project in northern Finland with the scoping study providing a strong foundation and significant step towards delivering on this objective.

“The KSB project provides a unique opportunity to support a sustainable supply of cobalt that is underpinned by the high margin economics of the gold from the project.

“We look forward to updating shareholders as we continue testing expansion potential and advance the project towards development.”

Going forward, resource expansion work will be undertaken in parallel with advancing the development of the pre-feasibility study – which will look to optimise underground and open pit mining at the project.

This article was developed in collaboration with Latitude 66, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

Originally published as Latitude scoping study reveals economic gold-cobalt operation in Finland