Omai values Guyana gold project at $4B

A recent economic study for Omai Gold Mines' project in Guyana places it among South America's largest and most valuable undeveloped gold projects, with a value of $4 billion - more than double its estimated costs. The preemptive economic assessment (PEA) estimates a 5% net present value (NPV) of $4 billion, assuming a gold price of $3,600 per ounce.

This comes with a 24% internal rate of return (IRR) and a payback period of 4.1 years for a project that could mine 6.3 million ounces of gold over an 18-year life. National Bank of Canada analyst Rabi Nizami noted that the study validates the gold project's globally relevant scale and long-life production profile, though the high initial costs and short payback period may prompt some initial profit-taking.

Despite this, Nizami expects Omai to remain an attractive M&A target for global producers. Omai, located 165 km south of Georgetown, Guyana, is one of the country's largest past-producing gold mines, generating over 3.7 million ounces between 1993 and 2005. Omai would produce approximately 1.9 million more ounces of gold and over a longer life compared to G Mining Ventures' Oko West project, according to the Oko West feasibility study.

However, Oko West's NPV is 9% higher, and its IRR is 19% greater. Initial costs for Oko West are about a third lower, and its payback period is just 1.6 years. Omai hosts 38.1 million indicated tonnes of gold grading 2.04 grams per tonne, and 106.6 million inferred tonnes at 1.59 grams per tonne. The project consists of the open-pit Wenot shear-hosted deposit and the adjacent underground Gilt intrusion-hosted deposit.

Omai's April 2024 PEA gave the project an after-tax NPV of $556 million at a 5% discount rate with a gold price of $1,950 per ounce. Ongoing drilling at Wenot may lead to further growth at the site.