Shares in Nighthawk Gold (TSX: NHK; US-OTC: MIMZF) jumped more than 20% after the company said its Colomac project in the Northwest Territories could pay for itself in about two years.
The open-pit project 200 km north of Yellowknife estimates annual production of 290,000 oz. of gold selling for US$1,600 each to generate US$464 million a year compared with estimated capital costs of $654 million, the company said in a preliminary economic assessment released on Wednesday. The after-tax payback period is pegged at 2.1 years.
“The Colomac gold project has the potential to be a phenomenal asset,” Nighthawk president and CEO Keyvan Salehi said in a statement accompanying the study. “Only a handful of gold projects in the world that are owned by junior gold companies have similar favourable economics.”
Shares in Nighthawk rose nearly 23% on Wednesday afternoon in Toronto to 59¢ apiece, within a 52-week range of 26¢ and 64¢, valuing the company at $73 million. Colomac would have an after-tax net present value of $1.2 billion at a 5% discount rate with an internal rate of return of 35% at the US$1,600 per oz. gold price, the study showed.
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