When gold is trading above $5,000 an ounce, the economics of large undeveloped gold projects begin to command renewed attention.
Fuerte Metals Corporation (TSXV: FMT) (OTCQB: FUEMF) said early this morning that a newly completed Preliminary Economic Assessment for its 100%-owned Coffee Gold Project in Yukon outlines after-tax net present value (NPV5%) of US$2.3 billion and an internal rate of return (IRR) of 47.8% at analyst consensus long-term gold prices. At a spot price scenario of US$5,000 per ounce, the study models an after-tax NPV5% of US$4.0 billion and an IRR of 67.2%.
The PEA envisions a 13-year open-pit, heap-leach operation producing an average of 249,000 ounces of gold annually during the first five full years of production and 217,000 ounces per year over the life of mine. All-in sustaining costs are estimated at US$1,274 per ounce over the life of mine, falling to US$1,166 per ounce in the first five years as higher-grade material is processed.
Total initial capital is projected at C$983.1 million, including C$638.5 million in direct construction capital, C$165.3 million in indirect costs and C$179.4 million in contingency. Sustaining capital over the life of mine is estimated at C$558.8 million, with closure costs of C$182.6 million. Direct capital includes C$71.3 million allocated to the Northern Access Route linking the project to Dawson City.
The study is based on a mine plan processing 90.5 million tonnes at an average grade of 1.25 grams per tonne gold, containing 3.64 million ounces. Average recovery is modeled at 77.5%, resulting in 2.82 million ounces of recovered gold. The life-of-mine strip ratio is estimated at 7.6:1.
Cash operating costs are forecast at US$1,136 per ounce, including mining, processing, refining, transport, general and administrative costs, and royalties. Operating costs average C$44.24 per tonne stacked. The project would process approximately 7.4 million tonnes per year using conventional truck-and-loader open-pit mining and a multi-lift, ridge-top heap leach facility.
The mineral resource estimate underpinning the PEA carries an effective date of August 21, 2025. Measured and Indicated resources total 80.0 million tonnes at 1.15 grams per tonne gold for 2.96 million ounces. Inferred resources total 21.2 million tonnes at 1.17 grams per tonne gold for 800,000 ounces. Approximately 16% of the ounces in the PEA mine plan are classified as Inferred and therefore cannot be included in the Feasibility Study scheduled for the fourth quarter of 2026. The company plans a 40,000-metre drill program in 2026 to upgrade portions of those resources.
Project economics are sensitive to gold prices. At US$2,500 per ounce, the after-tax NPV5% is modeled at US$983 million with an IRR of 26.4% and a 2.9-year payback. At US$4,500 per ounce, after-tax NPV5% rises to US$3.38 billion with an IRR of 62.1%. The consensus case assumes long-term pricing of US$3,620 per ounce beyond 2030 and a CAD:USD exchange rate of 1.39.
CEO Tim Warman said the PEA “strongly validate[s] our decision to acquire the Coffee project in 2025” and outlined an aggressive timeline that includes early works in 2026, commencement of remaining road construction upon receipt of permits, and a targeted construction decision in early 2027. The company anticipates receiving its Quartz Mining Licence and Water Use Licence by year-end 2026.
The environmental and socioeconomic assessment process was completed in 2022, and major mine licence applications were filed in 2023. The company acknowledged that amended permits will be required to fully align with the scope outlined in the PEA, though it said the first several years of construction and operation would not require material divergence from existing approvals.
The heap leach facility design incorporates a double-liner system, gravity-fed solution collection, and third-party technical review. The company said a failure modes and effects analysis was completed in 2025, informed by findings from the Independent Review Board investigation into the Eagle Gold Mine heap leach failure. An Independent Technical Review Board is expected to monitor design and operations.
The Coffee project spans a 70,000-hectare land package in Yukon. Mining would take place year-round, with ore stockpiled during the coldest three months. Gold recovery would use activated carbon adsorption, desorption and electrowinning, producing doré bars on site.
Fuerte stated that protection of water and lands around Coffee Creek remains of high importance to local First Nations and said it will continue engagement with Tr’ondëk Hwëch’in, White River First Nation, Selkirk First Nation, and the First Nation of Na-Cho Nyäk Dun.
The PEA is preliminary in nature and includes Inferred mineral resources considered too speculative geologically to be classified as mineral reserves. A technical report prepared in accordance with National Instrument 43-101 is to be filed within 45 days.
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