Meridian Mining (LSE:MNO) reported working capital of $87.7 million at 30 September, down from $93.8 million at 30 June, as the London- and Toronto-listed developer of the Cabaçal gold-copper-silver project in Mato Grosso, Brazil, pressed ahead with preparations for a final investment decision.
Cash stood at $90.1 million at quarter end, against $96.0 million three months earlier.
The quarter's central event was the 22 September release of Cabaçal's Definitive Feasibility Study, which put the project's after-tax net present value at a 5% discount rate at $2.092 billion, with an internal rate of return of 107.6%, payback within 0.9 years and an NPV-to-capex ratio of 6.5 times, based on prices of $3,570 per ounce of gold, $5.03 per pound of copper and $50.17 per ounce of silver.
The DFS set initial capital expenditure at $322 million, including 10% contingency and pre-investment for expansion to 4.5 million tonnes per annum from year four, and forecast life-of-mine revenue of $5.4 billion against after-tax free cash flow of $2.9 billion.
Over the first five years of production, Meridian expects average annual output of 183,526 ounces of gold equivalent at an all-in sustaining cost of $715 per ounce, generating average annual after-tax free cash flow of $413.8 million; life-of-mine all-in sustaining cost is forecast at $1,056 per ounce of gold equivalent.
"I am pleased to report on one of the most active and important quarters in Meridian's history," chief executive Gilbert Clark said, pointing to the DFS release and the company's progress toward "a final investment decision on the first new producing copper-gold mine on the wider Cabaçal district."
Smelter testing during the quarter confirmed the quality of Cabaçal's copper concentrates, producing blister copper grading 98.9% copper.
Since the quarter closed, Meridian has appointed AFRY as the engineering, procurement and construction management (EPCM) contractor for Cabaçal following a technical due diligence process, and has committed to contracts totalling $30.9 million for pre-construction items including the EPCM contract, power transformers, off-site civil infrastructure, a SAG mill, Jameson Cells and an IsaMill.
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The company also disclosed it has received more than twenty indicative financing proposals, with several parties offering fully financed packages of $400 million covering project debt, cost overrun funding, any required equity contribution, and offtake and marketing services; Meridian said it is now working toward a short list of preferred bidders for detailed negotiations.
At Santa Helena, part of the wider Cabaçal VMS Belt, the company reported the discovery of multiple stacked layers of gold-copper-silver and zinc-lead VMS mineralisation beneath existing workings, extending the known limits of mineralisation.
Meridian joined the FTSE 250 index from 1 October, following a late-September announcement by FTSE Russell, and was added to the VanEck Junior Gold Miners exchange-traded fund effective at the close of markets on 18 September.
The Cabaçal Mineral Reserve estimate comprises proven and probable reserves of 56.04 million tonnes grading 0.61 g/t gold, 0.35% copper and 1.33 g/t silver.