Omai Gold Mines values Guyana project at four billion dollars

Omai Gold Mines has released a new preliminary economic assessment for its namesake project in Guyana, valuing the asset at four billion dollars. The study positions the site among the largest and most valuable undeveloped gold projects in South America. The net present value is more than double the estimated initial capital costs of 1.42 billion dollars. The company reported the findings on Wednesday, outlining a 24 per cent internal rate of return and a 4.1-year payback period. The project could mine 6.3 million ounces of gold over an 18-year life. The valuation assumes a gold price of 3,600 dollars per ounce and is discounted at five per cent.

Rabi Nizami, an analyst at National Bank of Canada, stated that the study validates a globally relevant scale and long-life production profile. He noted that the project offers better throughput, production and strip ratio than previously expected. However, he acknowledged that these benefits are offset by the 1.4 billion dollar costs and the four-year payback period. Nizami suggested that while there may be some initial profit taking on the news, interest in Omai is expected to remain strong. He believes the company is emerging as a clear target for mergers and acquisitions by global intermediate and large-cap producers.

Despite the positive economics, Omai shares were down one per cent to 2.96 dollars apiece on Wednesday morning in Toronto. This represented a market capitalization of two billion Canadian dollars, or 1.45 billion dollars. The stock has traded in a 12-month range of 86 Canadian cents to 3.16 Canadian dollars. The new assessment comes just four months after Omai released a resource update showing the project hosts one of the largest gold resources in the country. The site is located about 165 kilometres south of the capital Georgetown in central Guyana.

The project is one of South America’s largest past-producing gold mines, having yielded more than 3.7 million ounces between 1993 and 2005. Guyana has emerged as a preferred gold jurisdiction in recent years, drawing investment with its stable mining regime and improving infrastructure. Elaine Ellingham, Omai’s chief executive officer, said the company is pleased to deliver the assessment. She noted that it reinforces the potential for Omai to become a very large-scale mining operation with a clear path to bringing significant economic benefits to the people of Guyana.

As a past producer, Omai benefits from highway access, a cleared site, an on-site airstrip, a tailings facility and known metallurgy. When compared with G Mining Ventures’ Oko West project in Guyana, Omai would produce about 1.9 million more ounces of gold over a longer life. However, Oko West’s net present value is nine per cent higher and its internal rate of return is 19 per cent higher. 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 grading 2.04 grams of gold per tonne for 2.5 million ounces of contained metal. It also holds 106.6 million inferred tonnes at 1.59 grams for 5.5 million ounces. The project comprises the open-pit Wenot shear-hosted deposit and the adjacent underground Gilt intrusion-hosted deposit. An April 2024 assessment gave the project an after-tax net present value of 556 million dollars at a gold price of 1,950 dollars per ounce. Drilling is ongoing at Wenot with five rigs, opening the possibility of further growth at the site.