TriStar Gold’s (TSXV:TSG) Castelo de Sonhos project in Brazil’s Pará state has seen its estimated value nearly double following the release of a new prefeasibility study (PFS). The update, announced Monday, replaces the company’s previous 2021 assessment and incorporates revised cost estimates and current metal pricing.

The updated study values the open-pit gold project at an after-tax net present value (NPV) of $603 million, using a 5% discount rate. This marks a substantial increase from the $321 million NPV cited in the earlier study. The internal rate of return (IRR) has also risen sharply from 28% to 40%, while the expected payback period for initial capital investment has shortened from an unspecified longer period to just two years.

These projections are based on a base-case gold price of $2,200 per ounce, up from $1,550 per ounce used in the 2021 study. Capital costs have also risen, now estimated at $296 million compared to $261 million previously. Despite the increased expenditure, the higher gold price and improved economic metrics have significantly enhanced the project’s outlook.

TriStar Gold, listed on the TSX Venture Exchange under the symbol TSG, described the updated PFS as a major step in moving the project forward. The company said it underscores the economic strength of Castelo de Sonhos amid record gold prices and a global shortage of permitted development-stage gold assets.

The mine plan remains largely unchanged. Castelo de Sonhos will use a conventional open pit design with processing facilities capable of handling 10,000 tonnes per day. The mineral reserves have not been updated in the new PFS. They stand at 38.7 million tonnes grading 1.1 grams per tonne of gold, translating to 1.4 million ounces of contained gold.

The mine is expected to operate for 11 years, broken into two production phases. The first six years will target higher-grade material, averaging 146,000 ounces of gold annually. During the latter five years, the project will shift to lower-grade ore, averaging 91,000 ounces per year. Life-of-mine average production is estimated at 121,000 ounces per year.

Beyond the updated economics, TriStar also addressed the status of the project’s environmental and legal standing. The preliminary mining permit, initially granted in August 2024, has faced scrutiny from a civil inquiry due to environmental concerns, particularly around potential impacts on Indigenous territories.

According to the company, an independent legal review has concluded that the project does not pose a threat to Indigenous lands cited in the legal proceedings. The legal opinion further stated that the project’s environmental impact assessment (EIA) is complete, robust, and adequate, and found no substantial grounds for the prosecutor’s concerns.

Additionally, TriStar reported that the state’s environmental authority, SEMAS, has reaffirmed that the project’s permit remains valid and in good standing. This endorsement by the permitting body helps stabilize the project’s legal footing at a time when environmental scrutiny remains high across Brazil’s mining sector.

Investor response to the announcement was immediate. Shares of TriStar Gold climbed 9.1% by midday on Monday following the release of the study and permitting updates. The market reaction lifted the company’s market capitalization to C$50.4 million.

With improved project economics, steady permit status, and favorable gold prices, the Castelo de Sonhos project now sits in a stronger position than at any point in its development history. The next steps for TriStar will likely involve advancing the project toward full permitting and final feasibility as the company continues to navigate regulatory processes in Brazil.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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