Economic assessment for Saturn Metals’ (ASX:STN) 1Moz Apollo gold project logs potential $1b earnings

• Saturn Metals’ (STN) early-stage economic report for its WA-based Apollo gold project suggests the project could earn more than $1 billion in earnings
• The company would need around $400 million to get a standalone gold mine live
• The company sees 122,441 ounces of gold being produced each year at nameplate capacity
• The report calculates that the payback period would only be 2.8 years
• Saturn Metals shares are up 8.57 per cent, trading at 19 cents at 10:44 am AEST

An early-stage economic assessment for Saturn Metals’ (STN) WA-based Apollo gold project could fetch the company more than $1 billion in earnings before interest, taxes, depreciation and amortisation (EBITDA).

The report figures Saturn will need $304 million to get a standalone gold mine operation running at Apollo with a 30 per cent internal rate of return for investors.

The company believes that it can produce 122,441 ounces of gold per year once operations are at nameplate capacity.

The net present value – on an unleveraged and pre-tax basis – sits at $390 million. Excluding construction, the company expects pre-tax cash flows in the vicinity of $90 million.

A further $41 million would be needed for early-stage exploration.

Perhaps of most interest to investors, however, is the relatively short payback period – only 2.8 years for an entirely new gold mine from scratch.

Part of the company’s confidence in its early-stage report comes from the fact that a majority of early-stage gold production would be mined from existing gold reserves in the higher-confidence ‘measured’ category.

The company noted further exploration work is not a guarantee that those reserves are commercially material to the company.

Over a ten-year term and based on an A$2,665/oz sale price, a fully developed Apollo could net the company $694 million pre-tax cashflow.

Notably, Saturn is waiting for the aftershocks of the COVID-era to iron out.

“The PEA has outlined a technically and financially robust project, within an economic environment which has not yet returned to equilibrium after recent global health and current conflict events,” the company wrote.

“A thorough and persistent technical approach to our work has provided Saturn with solid economic foundation from which to build the future of the Apollo Hill asset,” STN Managing Director Ian Bamborough said.

“Apollo Hill now has demonstrated potential to become a profitable, long-life mine with robust margins and strong economic returns. The PEA has paved the way for Saturn to accelerate project development activities.”

Saturn Metals shares were up 8.57 per cent, trading at 19 cents at 10:44 am AEST.