|I was just reading through the latest PR from International Tower Hill Mines aka ITH, and it is a perfect example of the perils of optionality.|
ITH owns the very large but low grade Livengood gold property in Alaska. They have been working away on it for many years, going quiet when the gold price is low and getting active again when it's higher.
This PR concerns the release of a PFBS for Livengood, and trumpets the size of the resource. But there are only two numbers you need to look at.
Capex is $2B.
Even at $2500 gold, the IRR is only 18.5%.
No one is going to build a mine with those kind of numbers. I am sure they can spend a few more years tweaking things and improve those numbers a bit, but it would still require gold to be over $3000 for the numbers to look good enough for anyone to consider funding them.
But of course, if gold was over $3000, this would make the numbers from hundreds of other projects improve even more, so I bet Livengood would never get funding even then.
Stay away from ITH.