Junior Gold Developers Turn to Low-Cost Oxide Heap-Leach Starters for Quick Cash Flow

Junior gold developers are turning to low-cost oxide heap-leach starters as a way to quickly reach cash flow and fund hard-rock exploration without issuing new equity, according to a growing number of companies.

Cabral Gold Inc. is a prime example of this strategy in action. The company financed its entire Cuiú Cuiú Phase 1 heap leach operation in Brazil with a US$45 million gold loan from Precious Metals Yield Fund, avoiding the need for an equity raise.

The Preliminary Feasibility Study (PFS) for the project projects a 78% after-tax internal rate of return (IRR) and a US$73.9 million net present value at a 5% discount rate (NPV5%), assuming a gold price of US$2,500 per ounce.

Cabral's CEO, Alan Carter, put it bluntly: 'There's an enormous profit margin on that material, on that gold that we expect to be producing very quickly.'