Dalradian spikes on Northern Ireland gold project economics

Europe continues to present new mining opportunities as countries grapple with the lingering financial crisis, and Dalradian Resources (DNA-T) sees potential in Northern Ireland.

The company, which has focused on its mesothermal Curraghinalt gold deposit in the country since listing in August 2010, saw its share price jump 23¢, or 37% to 85¢ after releasing the first economic study on the deposit.

The preliminary economic study is based on a November 2011 resource estimate that outlined measured and indicated resources of 1.13 million tonnes grading 13 grams gold per tonne for 470,000 oz. gold, plus 5.45 million inferred tonnes carrying 12.74 grams gold for a further 2.23 million oz. gold.

The mine plan calls for an underground, ramp-accessed mine that produces 1,700 tonnes of mined rock a day. At an average grade of 8.1 grams gold and 92% recoveries, the company expects to produce 145,000 oz. gold per year for 15 years.

Using a three-year trailing gold price of US$1,378 per oz., the financials of the mine work out to an after-tax net present value (NPV) of US$466.7 million using an 8% discount rate and a 41.9% after-tax internal rate of return. A one-year trailing average of US$1,672 brings the NPV to $840.6 million and the IRR to 51%, while a five-year trailing average of US$1,166 brings the NPV to $460.5 million and the IRR to 33.4%.

Cash operating costs, including 6% in total royalties, comes to US$531.98 per oz., making for a net operating margin of US$846.05 per oz. based on the three-year trailing gold price. Net cash flow after tax comes to US$535.98 per oz. gold. Capital costs, meanwhile, come to US$192 million for initial start-up, and life-of-mine sustaining costs add US$110 million.

The Curraghinalt deposit, located 120 km west from Belfast by road, consists of at least seven primary gold-bearing quartz-sulphide veins ranging from 0.5 metre to 3 metres in width. The deposit lies under the rolling hills of a sheep pasture, and sits at the centre of Dalradian’s 840 sq. km exploration property.  

Dalradian is led by Patrick Anderson as chairman and CEO, who was previously CEO of Aurelian Resources. He is joined on the board by Joseph Conway, former CEO of Iamgold; Sean Roosen, CEO of Osisko Mining; Ari Sussman, executive chairman of Colossus Minerals and CEO of Continental Gold; Colin Benner, chairman of Delta Minerals and Aurico Gold; Thomas Obradovich, chairman of Lago Dourado Minerals and former CEO of Young-Davidson Mines; Ronald Gagel, former chief financial officer of FNX Mining; and Keith McKay, Dalradian’s chief financial officer and former chief financial officer of Andina Minerals and Aurelian Resources.  

The company had $37.4 million in cash at the end of March, having raised $25 million at $2 per share in mid-February. Dalradian’s share price peaked at $2.75 shortly after listing in 2010 and hit an all-time low of 62¢ the day before the PEA was released. The company has 89.3 million shares outstanding.

Other companies in Northern Ireland include Galantas Gold (GAL-V), which put out an economic study on its Omagh deposit in early July and produced 933 oz. gold in the first quarter from its Cavanacaw mine; Lonmin (LMI-L, LNMIY-O), which has a platinum exploration project in the country; and Conroy Gold and Natural Resources (CGNR-L), which has an exploration project on the border with Ireland.