Mark Ashley
executive
Thank you, Rudi. Ladies and gentlemen, my name is Mark Ashley. I will be the CEO of Valor Gold once the closing happens. Next week, we applying to the court for formal approval the week after, we hope to get TSX listing.
And the week after an OTCQB quotation. I've been in the mining industry for 45 years. I'm not a mining engineer geologist, but I have learned over that 45 years through coming up in the business, getting my hands dirty in various jurisdictions and various commodities, open pit underground gold, refractory gold. And I spent five years in Africa. I was born in the U.K. There's not too many gold mines in London. And then went to Turkey and Australia for 25 years and built a number of companies from Shell to multibillion-dollar companies to [ Dara Zinc ] LionOre was a company that I helped to build to become -- from a shell to become the eighth largest nickel producer in the world, which attracted a bid by Xstrata in 2007, which was outbid by Norilsk and Norilsk ended up winning that bidding war and bought LionOre for just under $8 billion.
A lot of fun, started with three people, no assets. Similar to [indiscernible], with -- this is with a substantial asset. I came to America in 2012, basically for an extended holiday. It's certainly extended because I haven't gone back. I saw a lot of opportunities in this part of the world in the mining industry and decided to stay. My wife is American, so it wasn't hard for me to get green card and then citizenship. I met Rudi a number of years ago.
I was asked by one of his institutional shareholders out of Austin, Texas to look at the KSM project and prepare a report, which I did. In that process, I met with Rudi, and it was clear from the start that we have very much like-minded approach to building mining companies, and that is fundamentally driven, not promotionally driven. And we got on really well. I've been working along helping alongside Rudi for the last few years. And a part of that, I've looked at Courageous Lake, started analyzing it, realized that there really wasn't any value in Seabridge's share price and quite rightly so because shareholders of Seabridge are clearly asking Seabridge to focus on KSM to put all their effort, resources into KSM.
And although Courageous Lake is a substantial asset, unless it's being developed and advanced, the investors won't put value and eventually, it gets forgotten. So there is clearly -- there was clearly no value in Seabridge's share price. And we suggested that we spin it out, and we would then create value initially and then build the value as the project advances.
And by spinning those assets back to the Seabridge shareholders, any accretive value generated as a result of the Spin-out will accrue to the shareholders. And that was clearly the most important aspect for Rudi and Seabridge. And in December, we started this process. And today marks an important milestone in getting the shareholder approval. Let me go through what we believe Courageous Lake is now and what we expect it to be in the future.
We hold over 500 square kilometers of ground up in the Northwest Territories, and it encompasses a 54-kilometer strike of a highly prospective Greenstone belt that's hardly been explored. The Courageous Lake has 15 million ounces in resource, 11 million in measured indicated and 4 million in inferred. We also have a non-refractory and Courageous Lake is a refractory deposit. I'll come on to that. But the Walsh Lake deposit that was discovered a few years ago is a non-refractory free milling. It's a small deposit, but high grade, and I'll explain how we believe that can get integrated into the mine plan and into the production plan.
But we're in an area that is what I regard Tier 1. It's a highly supportive environment, both in terms of the First Nations and the local government. There are a number of diamond mines in the region. And Diavik is one of them, announced its closure in March. And I think that really cemented the realization of the community of how important mining actually is. And I was in Yellowknife last week for the week, meeting with the First Nations government, Federal and territorial, and there is significant support.
This is the next major development of a mining project in this region, and I think we'll get substantial support. In addition, the support by Canadian government, the Prime Minister and Premier came to Yellowknife a couple of months ago, announced a $40 billion arctic investment corridor, focused on the infrastructure, defense and includes a road, all-weather road from Yellowknife right up into the arctic. We don't know where that road goes, but we expect it to go close to or close enough to Courageous Lake that we would put an all-weather spur and be able to access the project 365 days a year.
Just a quick couple of slides in terms of the significance. Courageous Lake is the third largest undeveloped gold project in Canada. Clearly, KSM is #1. And in terms of grade, it's a standard. Now I just have to mention that grade is only one aspect of determining whether a project is financially economic and robust. There are many others, but this is just a bit of a guide in terms of the significance of the project itself.
In January 2024, Seabridge received a 43-101 report by Osenka, 400-odd page report on the Courageous Lake project. It was done at $1,850 gold price, which was the gold price at the time. And it focused on -- it had two parts to it, a pre-feasibility study, which in that gray area that you see there is the top 300 meters of the deposit and a PEA, preliminary economic study from the 350 down to 565. The pre-feasibility study had 200,000 ounces of gold a year for 13 years.
The PEA had a similar production rate, 200,000, but starting in year 13 and going through to year '29. And of course, the NPV impact of starting at 13 and going through year '29 is a big issue. But the pre-feasibility study had an after-tax net present value at 5% of $523 million. The PEA had an incremental NPV of $104 million. Now one thing to bear in mind is that the PEA had a small amount of inferred included, and that's predominantly the reason why it's a PEA. There is other little bit that we need to do work in terms of permit frost, et cetera. But to take this from a PEA to a PFS is not a major task, and we'll come on to that. As we know, the gold price has increased substantially since they're not only the spot price, but also the forecast long-term consensus price.
And what we have done is taken the resource that was determined in January '24 and applied a higher gold price. I'm looking at $3,300 an ounce. There's other companies that are using a higher price. For example, Agnico Eagle used $3,600 two days ago when they announced their Hope Bay project. So I think I'm being a little conservative with [ 33 ]. I've also added 5% per year for two years to both operating and capital cost to bring it to today's level 2026.
The impact of that has been to increase the NPV of the top 300 meters from $500 to $1.8 billion. And in terms of the PEA, it increases it from the incremental value from $104 million to $800 million. Now if I took out the inferred, the small amount of inferred that is in there causing this to be a PEA, mainly causing this to be a PEA, that $800 million comes down to $700 million. So it's still very substantial. If I have done that in January '24, that $100 million would have come to 0.
Now what this doesn't include, it doesn't include a reanalyzing of the pit itself. So within that main pit, there will be -- that was developed in '24, there will be waste blocks that because of the higher gold price would now be regarded as ore. The cost of mining that material is included. But as I say, it's been treated as waste. There will be an increase in those ore blocks once you -- once we analyze the resource model. And also by applying a higher gold price, it's likely to deepen the pit or extend it. We haven't done that, but we will be. And internal rate of return for the ultimate pit goes from 20% in January '24 to 59% now.
The other aspect that we haven't considered is if you can see that top diagram, there is a lot of red in there. That red is inferred. $4 million of that very small part has been included in the mine plan. The rest of it is treated as waste. Whether you drill that out to bring it up to measured indicator, I don't think so. I don't think we need to because we've already got a very robust project and you're spending money and a lot of time and drilling something that is -- if it's there, we'll get it. When you start mining and operations, grade control will determine whether or not that inferred is there.
And if it is, it will go to the mill. If it's not, it will go to the waste up. But that's -- I see that as a potential significant added value in the future. Walsh Lake is 10 kilometers south of Courageous Lake. It's, as I say, non-refractory deposit. It's small 4 million tonnes, but high grade, 4.2 grams. I've put a screening economics around this, put a pit. And the concept is that you have maybe a crusher and milling on site and then you pump the slurry to the Courageous Lake facility. You would miss -- you bypass the front end, which is the BIOX and put it into the CIL tanks, meaning that we have a shared facility. There's very little capital that would be required and no fixed cost.
The fixed costs are being incurred already. And on that basis, we estimate that we'll add between $300 million, $400 million NPV, and that includes $100 million for capital for this project for the crusher grinding for roads and the deposit on the mine equipment.
We believe that there's a lot more. There's more Walsh Lakes in that region to be delineated. So as part of our Phase 1 program, we'll start drilling in January next year, the winter, we can't drill earlier. So in January, we'll be drilling -- infill drilling Walsh Lake to bring it to a measured indicated and we'll be testing other anomalies and areas that have been drilled previously that have given indications of a similar style mineralization. So that will be our first course.
And once we've included the -- once we've got Walsh Lake to a measured indicated, we will bring it into an integrated pre-feasibility study, which will include both the upper and the bottom part of Courageous Lake as well as bringing in the Walsh Lake deposit. We will have that completed, we expect by December '27.
We are starting the permitting process now. We have no doubt that this will turn into a mining operation. So things like baseline studies have commenced so that we are in a position to press the button once we have a full feasibility study finance in place, we'll have our permits coming in at the same time. So this is a diagram of the other areas that we were talking about that we expect to be non-refractory.
We've got Courageous Lake at the top here, up here, we've got Walsh Lake, that's 10 kilometers. So this is just 10 kilometers of a 54-kilometer strike length -- and we're just focusing on that particular area at the moment. And here are the other indications, I won't go through these grades or width, but it's clearly significant.
So in summary, there's going to be an upgrade in the resource because of the increase in the gold price. Whether we formally do anything about the inferred, I don't think so. I think we're going to have enough to justify developing this project, but there is no question that those inferred will improve the overall economics.
The integration of non-refractory ore into the operating strategy. The other aspect is that the '24 feasibility study had a 29-year life and that's before Walsh Lake or anything else coming in. I think we all know that the net present value, the discounted cash flow after 20 years is such that the cash generated after '20 is discounted so much, it's not really worth it. So with the expectation and the prospectivity, to me, I don't think we need a 30-year life. We probably need a 20-year life, and we'll grow from there. So we'll be looking at a production rate that is higher than the 2.7 million tonnes a year that was assumed in the 43-101 in '24.
Now that's going to be more capital, whether or not that capital will be beyond our capacity is a question. But if it is, we have to bring a partner, which is something I don't want to do. I think what we'll do is build this maybe as a smaller project with the intention of adding to it later on through cash flow. But those are all the aspects that we need to bear in mind. But with a higher throughput rate, our fixed costs are going to reduce, and therefore, that will impact again on the economic resource model.
The regional exploration upside, we just think it's fantastic. We'll be doing a lot of drilling along there. As I said, most of our drilling is going to be looking at new opportunities rather than infill. And as I say, the strong commitment of the First Nations, the regional government Federal -- sorry, the Federal and territorial governments is very, very positive for this project.
I'll just put a very conceptual time line here, which starts with the baseline for permitting, all going well, we could be in production early '32. Now everything is going to change and it may get extended, but if we get extended, I would hope that there will be new discoveries. But for us, it's important to try and assess what the project parameters are going to be to include in our permitting. So determining whether or not we've got another Walsh Lake or bringing the Walsh Lake into the production profile are important aspects.
So the Board management, myself, Marcus, Steven is here. Our Chairman, Alan Edwards, he's a mining engineer. He's been around a while. He's a Director and Chairman of a number of companies. He's actually a Director of Arizona Sonoran. He spent his many years in Indonesia. He developed Grasberg. He's a great person to have agreed to come and join us on the Board. Rob Parkinson is an Australian. He worked for Fortescue. Andrew [ Forest ] is a geologist business development team. He retired from Fortescue and has again agreed to join us. Very excited. And then we have Elizabeth Julie and John as other directors,
Elizabeth and Julie are executives of Seabridge, and we see those as bringing a lot of legacy benefits to the company. So that's very quick. We haven't yet taken control of the company, but I think we've got a vision for the asset. So yes, happy to take some questions if there are any.
tracken
