Desert Gold's SMSZ Gold Project Hits Major Milestone: PEA Shows $24M NPV and 34% IRR at $2,500/oz

Desert Gold Ventures Inc. (TSXV: DAU) has released its inaugural Preliminary Economic Assessment for the Barani and Gourbassi gold deposits within the SMSZ Project located in western Mali. The study reveals compelling economics for a straightforward open-pit operation spanning over 17 years.

Key Financial Takeaways

At the base case gold price of $2,500/oz, the project demonstrates an after-tax NPV (10% discount) of $24 million with a 34% internal rate of return and a 3.25-year payback period. More impressively, if gold trades at the current spot price of $3,366/oz, those metrics expand dramatically: NPV jumps to $54 million with a 64% IRR and just 2.5 years to recoup investment.

Total cumulative cash flow over the 17-year mine life is projected at $71 million after-tax, generating approximately $4.1 million annually. The capital requirement stands at just $16 million, with initial development costs of $15 million and sustaining expenditures of $9 million through closure.

Production Profile and Operating Economics

The Desert Gold operation targets approximately 97,600 recoverable ounces of payable gold across both deposits. Monthly ore production is estimated at 18,300 tonnes (220,000 tonnes annually), with average annual gold output of 5,500 ounces. The processing flowsheet employs a gravity recovery system followed by carbon-in-leach (CIL) technology, achieving an 86% metallurgical recovery rate on average grades of 0.95 g/t.

All-in sustaining costs (AISC) are pegged at $1,352 per ounce, while total cash costs average $34.80 per tonne processed. Mining will extract approximately 3.71 million tonnes of mineralized material alongside 9.18 million tonnes of waste rock, yielding a combined life-of-mine strip ratio of 2.47:1. Free-digging oxide material in the upper pit benches is expected to minimize blasting requirements.

Capital-Efficient Staging Approach

Desert Gold’s design prioritizes flexibility and cost containment through a phased development strategy. Mining commences at Barani East before transitioning to Gourbassi deposits, with a modular processing plant relocated between sites rather than duplicated. This approach substantially reduces upfront capital while maintaining operational efficiency. Initial capex breakouts include $3.2 million for plant mobilization and construction, $2.8 million for power and water infrastructure, and $1.8 million for tailings management.

The Barani East Small Mine permit permits throughput up to 36 kilotonnes monthly, providing potential to double current production levels from the 18 ktpm baseline outlined in the assessment.

Resource Base Provides Expansion Optionality

The current PEA incorporates less than 10% of the SMSZ Project’s total gold resources. Desert Gold has defined 11.12 million tonnes of Measured and Indicated resources grading 0.94 g/t Au (336,800 oz total), plus 27.16 million tonnes of Inferred resources at 1.01 g/t Au (879,900 oz). Additional exploration targets including Mogoyafara South, Linnguekoto West, and the Keniegoulou area were excluded from the economic model but represent clear upside opportunities.

Over 1 million ounces of gold remain outside current pit shells—deeper, narrower, or higher strip-ratio mineralization that may be integrated following additional drilling and optimization work.

Sensitivity and Risk Mitigation

The project exhibits strong leverage to commodity prices. At $2,000/oz gold, after-tax NPV contracts to $6 million with 17% IRR; conversely, at $3,000/oz, NPV reaches $41 million with 51% IRR. Operating cost reductions of 20% would boost after-tax NPV to $34 million (45% IRR), while a 20% increase in capex only reduces NPV to $21 million (28% IRR). The project remains profitable across plausible cost and price scenarios.

Technical Foundation and Next Steps

Minxcon Group prepared the PEA to ±25% confidence accuracy, incorporating comprehensive metallurgical testing on oxide and transitional mineralization demonstrating free-milling characteristics and low-risk processing protocols. Ore testing confirms minimal refractory behavior and soft, low-abrasiveness textures that reduce grinding capital and operating requirements.

Management is advancing discussions with potential development partners to begin Barani East construction as soon as possible. Concurrent efforts include pit optimization studies aimed at deepening the primary pit to reduce strip ratios, plus new drilling programs at both the Barani Small Mine Permit and Gourbassi West/West North licenses targeting strike extensions and depth continuity to expand existing zones.

The site benefits from proximity to Kenieba (15 km away) and well-maintained regional road infrastructure, enabling year-round access and direct logistics connections to Bamako and Senegal. Desert Gold plans to source workforce primarily from local communities, supporting regional employment while maintaining a lean, owner-operator staffing model.