Kaminak’s Coffee Gold Project Offers Compelling Economics

Positive news from Kaminak Gold this afternoon as the company released its eagerly awaited feasibility study for its flagship Coffee Gold Project in the Yukon. This is the crux of the report:

“At a gold price of US$1,150/oz and an exchange rate of C$1.00 to US$0.78, the Coffee Project base case estimate (the “Base Case”) generates an after-tax net present value (NPV) at a 5% discount rate of C$455 million and an internal rate of return (IRR) of 37%.  The proposed mine will operate over an initial ten year mine-life with average annual gold production in excess of 200,000 ounces for the first five years (excluding the initial 3 month ramp-up period), and average annual life-of-mine gold production of 184,000 ounces.  Initial capital expenditure to fund construction and commissioning is estimated at C$317 million, with a life-of-mine capital cost of C$478 million (including C$60 million in closure costs). The all-in sustaining cash costs (as defined per World Gold Council guidelines, less corporate G&A) is estimated to be US$550 per ounce of gold produced.  The project is expected to have a significant impact on Yukon’s GDP, generating over $2 billion of gross revenue and contributing 480 permanent, high paying jobs.”

And here are the gold price sensitivities for the project:



This is a great report that demonstrates solid profitability even at US$1,000/oz gold. It is interesting to note that the plunging oil price and weak Canadian dollar have enhanced the economics at Coffee given that Kaminak’s labor and infrastructure costs are incurred in Canadian dollars.

Kaminak’s stock (KAM.V) was halted prior to the release of the feasibility study and it will be interesting to see if KAM will break out from the range it has been trapped in for the last 3 years:


KAM.V (Weekly)


C$1.00 is a big upside level; a move above C$1.00 would indicate that investors are optimistic that Coffee will move forward with receiving permits and obtaining financing on good terms.