Impact: Positive
Denarius reported results from a PEA for its 100%-owned Zancudo project in Colombia. At long-term prices of US$1,800/oz Au and US$22/oz Ag, the PEA envisions an underground operation with a ten-year mine life that generates an after-tax NPV5% of US$206.3M, IRR of 287% and payback of 1.2 years. Zancudo has a low initial capital cost of US$14.8M and is expected to generate annual production of ~56k oz Au and ~855k oz Ag at an average AISC of US$1,059/oz. In our view, the PEA demonstrates Zancudo could support a low-capex, high-grade mining operation with robust economics. As we detailed in our recent thematic report, Zancudo historically produced 1.4-2.0M oz AuEq before it was acquired by Denarius in 2021. We believe Zancudo would provide a near-term source of cash flow once it is in production. This should ultimately help fund the advancement of Denarius’ Spanish projects in the Iberian Pyrite Belt, including Lomero-Poyatos, where numerous work programs are underway and an updated PEA is expected in 2024.
