Toronto-based Largo Resources (TSX-V:LGO) announced Tuesday the results from its NI 43-101 compliant preliminary economic assessment report on the Currais Novos tungsten project in northeastern Brazil, which highlights a whopping pre-tax IRR of 163%.
The Currais Novos property is located 179 kilometres west-southwest of Natal in the State of Rio Grande do Norte. At Currais Novos, tungsten mineralization is concentrated in two tailings piles known as Barra Verde and Boca de Laje. The company hopes to begin production of WO3 concentrate, or tungsten, from the reprocessing of these tailings.
The results of the report, completed by D.E.N.M, are based on an estimated initial capital investment of US$6.1 million, and the milling of 4.27 million tonnes of tailings material at a grade of 0.115% WO3.
The economic assessment indicates the project has a discounted payback of less than one year, and that it is expected to generate net revenues of US$29.8 million over its anticipated four year production life, based on a price of US$260 per mtu of WO3. This yields a pre-tax IRR of 163% and a net present value of US$15.2 million, at a discount rate of 10% per year.
Total WO3 concentrate produced over the projected life of the operation is estimated to be 4.9 million lbs, the company said.
Incorporating the results from the company's 2010 auger drill program at the site, which consisted of 121 holes totalling 794 metres, the updated resource estimate is 3.46 million tonnes of indicated at 0.120% WO3 and 810,000 tonnes of inferred at 0.093% WO3. The estimate for the two tailings deposits was completed at a cut-off grade of 0.06 % WO3, Largo said.
Construction at the project to recover tungsten from the main tailings is now underway, with production expected to begin by June next year.
"Largo remains confident that there is potential to significantly increase the tungsten asset base in the Currais Novos region. Largo also hopes to develop bi-product credits in order to increase production volumes and the production life at Currais Novos," it said in a statement.
The processing facilities at Currais Novos are expected to include equipment and infrastructure capable of processing a minimum of 3,288 tonnes per day of reclaimed tailings.
Aside from Currais Novos, Largo currently holds an 80% interest in the Maracas Vanadium Project, a 100% interest in the Campo Alegre de Lourdes Iron-Vanadium Project, all in Brazil, and a 70% interest in the Northern Dancer Tungsten-Molybdenum property located in the Yukon Territory, Canada.
Largo was up 1.5% on Tuesday, trading at $0.33 as of 1:13pm EST.