At the time of writing, shares of Echo Resources Ltd [ASX:EAR] are down by 9.09%, to 20 cents per share. Echo Resources is a gold developer, with tenements across Western Australia.
Why did Echo Resources Ltd shares do this?
The company announced its bankable feasibility study (BFS) for the Yandall gold project today. The BFS considered a two-stage open-pit mine across two deposits, producing 746,000 ounces over an 8.5-year life.
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What now for Echo Resources Ltd?
Here are the headline numbers:
Source: Echo Resources
The numbers look solid.
Assuming an AUD$1,600 gold price, the post-take internal rate of return (IRR) is 147%. Put differently, that’s the return that shareholders can expect for taking on the project. The break-even cost for the first 3.75 years is AU$1,075 per ounce.
It sounds good.
But, how will the company fund the initial capital cost of AU$39.3 million?
It will be a mixture of debt and equity.
That’s putting shareholders off from buying…
The bottom line: I like where the company is going. But it needs to raise capital to put the mine into production. Once that happens, the share price could explode ― especially if the gold price starts to turnaround!
Resources Analyst, Markets & Money
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