Omai Gold Mines, a Canadian company listed on the TSX Venture Exchange, has filed a technical report supporting a preliminary economic assessment (PEA) for an 18-year mining operation at its Omai Gold Project in Guyana. The study puts the after-tax net present value at US $ 5.74 billion. These figures are the company's own and are preliminary.

The report is dated 2 October and was prepared by SLR Consulting (Canada). It supports results the company announced on 19 August. The plan covers two deposits: Wenot, which would be mined from an open pit, and Gilt, which would be mined underground.

The financial case rests on a gold price of US$3,600 an ounce and a 5% discount rate. On those terms, the study estimates an after-tax internal rate of return of 24% and a payback period of 4.1 years. Net present value is the current worth of future cash flows after the discount rate is applied. The internal rate of return is the annual yield the project would earn, and the payback period is the time needed to recover the initial investment.

On production, the study estimates average output of 351,488 ounces a year, with a peak of 435,667 ounces. Total payable production over the life of the mine would be about 6.33 million ounces. Initial capital is put at US928 million is allowed for sustaining and growth capital. All-in sustaining costs over the life of the mine are projected at US$1,608 an ounce.

The study draws on two categories of resource. Indicated resources contain about 2.5 million ounces, and inferred resources contain about 5.5 million ounces. Inferred resources therefore make up the larger share. The company says they are too speculative to support a mineral reserve classification and that there is no certainty the projected results will be realised.

Omai is continuing a 50,000-metre drilling programme using five rigs. Elaine Ellingham, the chief executive, said the filing supports the next development steps. "We look forward to continuing to expand and optimise this project while we advance towards a Feasibility Study," she said. Omai describes itself as a Canadian gold explorer and developer, and the project is wholly owned by the company.

A PEA is an early-stage study. It tests whether a deposit might be worth developing and does not amount to a decision to build a mine. A feasibility study, which the company says is its next goal, would need to establish reserves and give firmer cost estimates before any investment decision could be taken.

The valuation is sensitive to the gold price. The base case assumes US$3,600 an ounce, and the report as summarised did not say how the value changes if the price falls. Readers should look for the sensitivity tables in the full technical report, which will show how far the net present value and the rate of return depend on that assumption. Analysts covering the stock may have their own price forecasts.

Several matters were not covered in the material published. These include how the project would be financed, the status of permits, and the results of any environmental and community assessments. The summary also gave no details of any agreement with the Guyana government, including royalties and tax treatment, and no construction timetable. The Guyana Geology and Mines Commission, which regulates the sector, has not been quoted.

Independent comment would help readers weigh the claims. Mining analysts could assess the capital estimate and the cost projections, and Guyanese officials could set out what the project would mean for revenue and employment. For now, Omai has a filed study and a plan to keep drilling, and the case for building a mine remains to be tested.

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