Fury Gold’s Eau Claire study posits 41% return

Fury Gold Mines’ (TSX, NYSE-A: FURY) first economic study of its Eau Claire gold deposit in Quebec shows strong returns across three development concepts. 

The base case using a gold price of $2,400 per oz. and includes full on-site processing, returned an after-tax net present value at a 5% discount rate (NPV5) of C$554 million ($402 million) and an internal rate of return (IRR) of 41%, the company said Tuesday. 

A hybrid case, starting with two years of toll milling before transitioning to on-site processing, showed an NPV5 of C$610 million and a 53% IRR. A full toll-milling option, sending all ore off-site for processing, generated an NPV5 of C$639 million and an IRR of 84%.

Initial capital costs in the preliminary economic study (PEA) are estimated at C$217 million for the base case, C$161 million for the hybrid, and C$117 million for toll milling, with after-tax payback ranging from 2.5 years for toll milling to 1.1 years for the base case.

‘Modest capital’

The study is highlighted by modest initial capital requirements and relatively low operating costs throughout the life of mine because the project benefits from significant regional infrastructure, Haywood Securities mining analyst Marcus Giannini said on Tuesday. 

“We see the PEA as a significant de-risking milestone for the Eau Claire deposit and validation of the project’s potential,” Giannini said in a note. “While the operation envisioned is somewhat smaller scale, we see strong flexibility in terms of developing the project on a standalone basis or leveraging regional infrastructure to accommodate a toll milling operating scenario.” 

Shares in Fury Gold gained 26% from Tuesday’s open to mid-Wednesday in Toronto at 89¢ apiece, their highest in two and a half years, valuing the company at $152.7 million. They’ve traded in a 52-week range of 49¢ to 81¢.

“The Eau Claire PEA scenarios each demonstrate an exceptional internal rate of return and net present value,” Fury CEO Tim Clark said in a release. “The results validate our belief that the market has significantly undervalued the project within Fury’s broader asset portfolio.”

11-year life

The study outlines total recovered production of 834,000 oz. over an 11-year mine life at the site in the Eeyou Istchee Territory of the province’s James Bay region. Output would average about 76,000 oz. per year from a diluted head grade of 4.46 grams gold per tonne. All-in sustaining costs are pegged at $1,140 per oz. in the base case, $1,153 per oz. in the hybrid case, and $1,170 per oz. in the toll-milling scenario.

The PEA is based on a May 2024 resource estimate using a gold price of $1,900 per oz., with 76% of the mine plan in the measured and indicated category. Eau Claire and the nearby Percival deposit host a combined 6.39 million measured and indicated tonnes grading 5.64 grams gold for 1.16 million oz., plus 5.45 million inferred tonnes at 4.13 grams for 723,000 oz.

“When Fury acquired the Eau Claire project in October 2020, we saw a clear pathway for the existing deposit to grow significantly,” said Bryan Atkinson, senior vice-president of exploration. “The steepening of the vein model in the eastern portion of the Eau Claire deposit has opened additional targets and bodes well for the next stage of the project.”