Dundee Precious Metals said that its fully owned Čoka Rakita gold project in Serbia will need an initial capital expenditure (capex) of $381m based on the findings of a preliminary economic assessment (PEA) study.

The capex encompasses direct as well as indirect capital costs, including contingency costs of $69m.

According to the PEA, the Čoka Rakita gold project will support an underground mining operation with an 850,000 tonnes per annum processing facility. The project will have an initial mine life of 10 years, as per the study.

Located nearly 35km northwest of the city of Bor, the Čoka Rakita project is in close regional proximity to Dundee Precious Metals’ existing operations in Bulgaria.

The PEA estimates an after-tax net present value (NPV) of $588m for the Serbian gold project.

It also projects a post-tax internal rate of return (IRR) of 33% with an after-tax payback period of 2.4 years.

The Čoka Rakita project is estimated to generate a free cash flow of $891m on an after-tax basis over the life of the mine.

Dundee Precious Metals is moving forward with a pre-feasibility study (PFS) and project permitting activities for the Serbian gold project based on the PEA.

In addition, the company aims to begin the construction in mid-2026 with the first production of concentrate slated to be achieved in the first half of 2028.

Dundee Precious Metals president and CEO David Rae said: “The PEA confirms our view that Čoka Rakita is a very robust project with the potential to add strong economic returns and very high-margin gold production growth to our portfolio.

“The results of the PEA are a testament not only to the quality of Čoka Rakita, but also our exploration and technical teams who have accelerated the project from the initial discovery we announced in 2023 to a PEA in under 16 months.”