1911 Gold taps 9-gram past in Manitoba for $1B value

A new study for 1911 Gold’s (TSXV: AUMB; US-OTC: AUMBF) True North project on the site of Manitoba’s first gold mine boasts an almost $1-billion value aided by strong gold prices and existing infrastructure. It aims to start production next year.

The preliminary economic assessment (PEA) gives the project a post-tax net present value of $998 million, in a US$4,800-per-oz. gold case, the company reported on Tuesday. The existing permitted underground workings and processing plant help keep initial capital costs at just $59.2 million but all-in sustaining costs are $1,897 per ounce.

The report on True North, which is about 150 km northeast of Winnipeg, shows no internal rate of return (IRR) because the mine would open and operate without any years of negative cash flow. The investment has a one-year payback period.

“1911 Gold continues to represent a low-capex entry point into a scalable, district-sized opportunity,” Haywood Capital Markets analyst Jamie Spratt said in a note on Wednesday. 

“Our forecasts continue to model a longer life mining scenario to reflect our view that resources at True North will continue to grow and be converted to mineable ounces in the near term through ongoing drilling,” he said, citing Haywood’s estimated 14-year life compared to 11 in the PEA.

115 years of gold activity

Named after the year when gold was first discovered in the Rice Lake area, 1911’s PEA positions the historic gold district for a potential revival through True North in a province where gold hasn’t been produced since San Gold’s mine at the same site closed in 2015.

Over a life that started in 1932, the San Antonio mine produced about 1.3 million oz. of gold at an average grade of more than 9 grams per tonne, higher than many typical Canadian gold mines. 1911 conducted reprocessing of historic tailings at True North in 2022.

1911 shares fell 2% to 97¢ apiece on Wednesday morning in Toronto, valuing the company at $298 million. The stock has traded in a 12-month range of 15¢ to $1.54.

‘Low capital path to production’

“The delivery of this PEA marks another defining moment for 1911 Gold, outlining a highly efficient, low-capital path to the first phase of production with robust economics and exceptional returns,” 1911 CEO Shaun Heinrichs said in a release. “Our staged development approach provides a disciplined roadmap to ramp up operations toward an initial steady-state production.”

At a lower price case of $3,000 per oz., the PEA estimates the NPV at $391 million with an unusually high IRR of 105%, and a payback period of 2.2 years.

Capital costs would rise by $46.7 million during the first two years of production ramp-up, and reach $367.2 million of sustaining capital over an 11-year life. All-in sustaining costs would come to $1,897 per oz. and at cash costs of $1,390 per ounce.

527,100-oz output

True North could produce 1,215 tonnes per day for average annual payable production of 58,100 oz. of gold in years three to eight of its life. The site also hosts tailings facilities, camp infrastructure, power and all-season access.

Total payable production would reach 527,100 oz. over Truth North’s life, generating $545 million in post-tax free cash flow. 

The company plans to release a pre-feasibility study for True North in the second half of this year.

True North hosts 3.5 million indicated tonnes grading 4.41 grams gold for about 500,000 oz. of contained gold, and 5.49 million inferred tonnes at 3.65 grams gold for 644,000 ounces, according to an updated resource from 2024.