After acquiring the Laiva gold mine in Northern Finland and Europe’s largest gold processing plant in November 2022, the still private Pilar Gold is wasting no time. As the company announces at the beginning of the year, the Laiva team is preparing to resume operations this spring. The goal for 2023 is to produce 50,000 ounces at an estimated all-in sustaining cost (AISC) of $1,400 per ounce. In the long term, an annual production of 100,000 ounces is targeted.
Laiva is a fully permitted, turnkey operation with everything in place for a rapid restart. The facility has some of the most modern equipment. The replacement value of the plant is estimated at 400 million euros (equivalent to C$2.38 per Pilar Gold share), apart from the fact that it would take at least 2 years. Pilar Gold acquired Laiva out of bankruptcy for US$23.5 million in equity, which equates to C$0.13 per Pilar Gold share.
To finance the reopening, Pilar has announced a capital increase of C$8 million. The capital round is to be conducted under the same terms as the last round last year: C$1 per share and a full warrant for 2 years at C$1.50 per share. Simultaneously with the capital increase, the company intends to solicit expressions of interest for a credit facility of US$15-20 million for Laiva. However, the completion of this facility will not affect the timeline for the restart, it is said. Nevertheless, the money will be needed to expand production to 100,000 ounces per year.
The Laiva gold mine has a state-of-the-art processing plant with a capacity of 6,000 tons per day, which was built in 2010 for €240 million and is still in excellent operating condition. Apparently, the plant in Laiva is very similar to Pilar’s processing plant in Brazil, which is why the team was able to identify a number of relatively simple but important adjustments to turn Laiva into a profitable operation. The operation is ready for mining and even has blasted material in the southern pit that was left over when mining was unexpectedly halted in December 2021.
Electricity is a crucial factor for Laiva’s profitability. As the Finnish nuclear power plant Olkiluoto 3 (OL3) will start regular power production in March this year after 17 years of construction, electricity prices could decrease. The commissioning of the OL3 nuclear power plant will increase Finnish grid capacity by 14%. Calculations assume a price of 15 cents/kWh this year, compared to 15.35 cents/kWh in 2022.
Laiva has faced some challenges in the past, but a crucial advantage is that Pilar took over the company debt-free and without creditors from a bankruptcy proceeding. The other major difference is that the gold price is substantially higher today and could continue to rise. Pilar is planning an investor site visit to Laiva in April. Exact dates will be announced later.
