The Bellevue Gold Ltd (ASX: BGL) share price has been a very poor performer on Thursday.
At one stage today, the gold-focused mineral exploration company’s shares were down as much as 23% to 74 cents.
The Bellevue Gold share price has since recovered slightly but is still down 20% to 77.5 cents.
Why is the Bellevue Gold share price being crushed today?
Investors have been selling Bellevue Gold shares today following the release of the Stage 1 Feasibility Study for its Bellevue Gold Project in Western Australia.
According to the study, the Bellevue Gold Project is on track to become a top 25 Australian gold mine with a production profile of 160kozpa in the first five years and Life of Mine (LOM) production of 151kozp.
It is also expected to have a LOM all in sustaining cost (AISC) of A$1,079 per ounce. This compares favourably to the current gold price of US$1,782.10 (A$2,300) per ounce.
So why the selling?
Although the above is very positive, the net present value (NPV) of the project appears to be spooking investors.
The study shows that the post-tax NPV of the project is estimated to be $562 million based on a gold price of A$2,300 per ounce.
It then reduces to A$444 million with a gold price of A$2,100 per ounce or increases to A$679 million at A$2,500 per ounce.
The problem here is that prior to today, the Bellevue Gold share price implied a market capitalisation of $834 million. That’s 48% higher than the current post-tax NPV of the project.
Though, it is worth noting that the company continues to make new discoveries which could increase its resource in the future. So, depending on how that goes, the Bellevue Gold share price could yet recover from today’s decline.