LONDON (Alliance News) - Condor Gold PLC on Friday revealed important financial projections for its La India project in Nicaragua which shows the project is currently worth around 16-times more than the company.
Condor received an optimisation study from Whittle Consulting Ltd back in October, but was unable to publish some of the financial figures, specifically the net present value and internal rate of return, because it was in an offer period whilst it conducted a strategic review and formal sale process.
However, Condor terminated the review and sales process on Monday, conceding it could not see an "acceptable premium" to its current share price being achieved in the short term. Condor said Friday it also terminated the process so it could release the La India project figures.
The new figures released Friday show the La India project has an average net present value of USD196.0 million - more than 16-times more than the company's current market capitalisation of around USD12.0 million, it said.
"The average net present value is USD196.0 million compared to the current market capitalisation of USD12.0 million, valuing the company at a price-to-book ratio of 0.06 times, highlighting the material undervaluation of the company's shares," said Chief Executive Mark Child.
Condor Gold shares were trading up 20% to 23.95 pence per share on Friday morning.
The average internal rate of return is 30% across the three production scenarios tested under the study.
The study also showed the amount of gold contained in the project area was 29% higher than previously thought, standing at around 1.0 million ounces from a previous estimate of 827,000 ounces of inferred and indicated gold, coming from the La India open pit and two feeder pits.
The study also showed an 18% increase in inferred and indicated contained gold within all of the pits at the project, to 1.5 million ounces from a previous estimate of 1.3 million ounces.
The increase in gold will allow the company to produce more as well, and La India is now expected to produce an average of 22% more gold per year in the first five years of production than previously thought. Under the three scenarios tested, the project will produce an average of 91,000 to 165,000 ounces of gold per year in the first five years - collecting between 796,000 and 1.4 million ounces of gold over the life of the project.
Importantly, the all-in-sustaining cash cost at the project remains under USD700 per ounce - giving a comfortable margin at the current gold price, which was trading over USD1,095 per ounce on Friday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Condor Gold (CNR)