Shovelnose Gold: a 43.2% IRR From a Project Near Vancouver

A development-stage underground gold project rarely posts numbers like these: a CAD $454 million after-tax net present value and a 43.2% internal rate of return, generated from a deposit that sits roughly two and a half hours by road from Vancouver. That is a return profile you would expect to see from an established mine expanding a known orebody, not from an asset still two technical studies away from a construction decision.

The Shovelnose Gold and Silver Project, operated by Westhaven Gold Corp. in southern British Columbia, is at an unusual point in its development. The headline economics are already on the table via the March 2025 Preliminary Economic Assessment, the resource infill drilling programme is effectively finished (109 holes, 34,265 metres, six holes remaining as of 22 September 2026), and the prefeasibility study was formally initiated in May 2026.

The question for investors is not whether the deposit has merit. It is whether the technical workstreams now advancing can sustain or strengthen those economics through to a final investment decision targeted for around late 2029. Here is what the technical record confirms so far, and which upcoming milestones actually move the investment case.

What the PEA economics actually say about Shovelnose

The 2025 PEA describes an 11.1-year underground operation producing an average of 56,000 oz of gold and 313,000 oz of silver a year, for total payable recovery of 637,000 oz gold and 3,562,000 oz silver across the mine life. Those are respectable volumes at moderate scale. What generates the return, though, is not the tonnage.

It is the grade.

At an average mine grade of 5.26 g/t gold and 32 g/t silver, each tonne of ore carries a substantial payload before processing costs are applied. Grade is what determines the margin per tonne, and paired with a 91.6% gold recovery rate (the proportion of contained metal successfully extracted through processing), it produces the “high margin” characterisation management uses. High grade in, high recovery out, and the per-tonne economics do the heavy lifting.

The relationship between grade, recovery, and per-tonne margin is the core logic behind Shovelnose’s return profile, and high-grade mineralisation economics generally exhibit a compounding advantage: a modest improvement in head grade produces a disproportionate lift in net revenue per tonne processed, which is why the 5.26 g/t average is doing more work in the PEA model than any single cost line.

The anchor numbers After-tax NPV (6% discount rate): CAD $454 million. After-tax IRR: 43.2%. Both drawn from the March 2025 PEA.

The second lever is sequencing. Westhaven intends to mine the highest-grade portions of the orebody first, which front-loads cash flow and compresses the payback period. That is the mechanism behind the “rapid pay-back” profile, and it is a large part of why the IRR sits at 43.2% rather than something more modest. Management has also indicated it does not need to delineate a large resource, no five-million-ounce target, before committing to a construction decision, which simplifies the path forward.

The mine plan draws on three deposits: South Zone, Franz, and FMN. Understanding that grade, recovery, and high-grade-first sequencing are connected levers, not separate bullet points, is what lets you read the PFS properly when it lands. These are the variables the next study will either confirm or revise, and they are where the risk concentrates.

What the drilling program confirms, and what it raises

The 35,000 m infill programme was never designed to find new ounces. It was designed on nominal 25 m drill spacing to do something narrower and arguably more valuable at this stage: upgrade the confidence level of ounces already in the resource, moving them toward the measured category so the PFS rests on a firmer foundation.

On that count, the results have delivered. Company disclosures characterise the intercepts as confirmatory of the resource model, reinforcing rather than reshaping what the PEA assumed. The key results include:

• 7 May 2026: 54 m grading 8.99 g/t Au and 55 g/t Ag
• 20 August 2026: 10.04 m grading 12.18 g/t Au and 103 g/t Ag, extending mineralisation below the South Zone
• Pre-Beaver Creek disclosure: 12 g/t gold over 10 m, roughly 40 m below the deepest level of the current mine plan

That last result is the one to sit with. Confirmation of the known resource is exactly what infill drilling is supposed to produce, and it de-risks the PEA base case. The intercept 40 metres below the current mine plan is a different kind of signal.

What the depth extension result could mean for mine scope

A high-grade hit below the deepest planned mining level raises a genuine open question: does the system continue at depth, and could that intercept represent a feeder zone, a channel through which mineralising fluids travelled, that extends the deposit further than the current plan assumes?

The sub-mine-plan intercept raises the question of whether mineralisation continues at depth as a coherent structural system or represents an isolated pod; gold deposit geology in the epithermal and mesothermal settings that characterise southern BC typically produces vertically continuous systems along structural corridors, which is what makes the feeder zone interpretation plausible rather than speculative.

The honest answer right now is that it is not yet resolved. It introduces potential upside to the mine plan scope, but also a variable the PFS may need to address rather than a confirmed extension. For investors, the distinction between confirmatory drilling and discovery-mode results is the point. One de-risks; the other opens a possibility that carries both promise and uncertainty.

As of 22 September 2026, 109 holes (34,265 m) of the 35,000 m programme were complete, with six holes remaining. Those results feed directly into the updated Mineral Resource Estimate expected in early 2027, which in turn feeds the H2 2027 PFS. The drilling is nearly done; the interpretation of it is where the next chapter begins.

The early 2027 mineral resource estimate update is the event that converts the infill drilling data into a formal classification verdict, and readers unfamiliar with how the process works will find that the confidence categories it produces, Inferred, Indicated, and Measured, have direct consequences for what assumptions the PFS is permitted to use in its mine plan and economic model.

The project’s location advantage and what it removes from the risk equation

The clearest way to understand Shovelnose’s infrastructure position is to ask what risks it does not carry. Many development-stage gold projects sit in remote northern terrain where power, access, and workforce all have to be built or imported at considerable cost. Shovelnose starts from a different baseline.

Consider what is already in place:

• Road access approximately 2.5 hours from Vancouver, no fly-in logistics
• Existing nearby electrical infrastructure, removing the need for a large-scale power build
• An established local workforce with mining-sector employment history
• Conventional cyanide leach processing, no novel or unproven techniques
• A tailings plan that avoids a wet tailings dam entirely

Each of those is a cost or permitting risk that a comparable remote project would have to absorb. Removing them is not a soft selling point; it is a structural input to the PEA’s “low-cost” characterisation, because reduced capital intensity is priced directly into the economic model.

A specific environmental de-risking point Roughly half of process tailings are planned to return underground as paste fill, with the remainder managed as dry-stacked tailings. No wet tailings dam is required, which removes one of the more contentious permitting and environmental liabilities associated with conventional gold mines.

The BC Environmental Assessment Office mining sector requirements explicitly assess tailings management alternatives, including paste fill and dry-stack methods, against Best Available Technology standards, lending regulatory weight to the approach Westhaven has incorporated into the Shovelnose design.

On jurisdiction, British Columbia has been actively issuing mining approvals. Westhaven points to recent activity at the Highland Valley expansion, Hudvay, and Copper Mountain operations as evidence that the province is granting permits rather than stalling them. For a global investor weighing where a project sits on the jurisdiction risk spectrum, that matters. The road access, existing power, and absence of a wet tailings dam together strip out three categories of risk that would otherwise sit in your due diligence file. It lends credibility to the PEA’s capital assumptions in a way that a remote-site project cannot match.

The development timeline and the catalysts that will define it

The path from PEA to production is best read as a series of gates rather than dates on a calendar. Each stage has to deliver a specific result before the next becomes possible, which means the timeline can accelerate if results cooperate or stall if they do not.

The PEA, PFS, and feasibility study sequence that Shovelnose is working through follows a well-established hierarchy: each study demands more engineering precision, tighter cost estimates, and higher resource classification standards than the one before it, which is why economic feasibility studies carry progressively more weight with institutional investors and project lenders as a project moves toward a construction decision.

Three workstreams are running concurrently inside the PFS, and their sequence tells you how the study fits together:

1. Resource infill drilling feeding the updated MRE, near complete and due to report early 2027
2. Metallurgical and ore-sorting studies, testing whether recovery holds and whether ore sorting can improve the processing economics
3. A C$4 million sonic drilling programme announced 22 September 2026, gathering geotechnical and hydrogeological data

That third workstream is easy to overlook but matters for facility siting. Geotechnical data governs where and how underground development can proceed safely, and hydrogeological findings shape tailings and water management design. Adverse results here could feed back into mine design and cost, which is why the sonic programme is a genuine variable rather than a formality.

How the Dundee arrangement addresses near-term capital risk

Financing is the quiet enabler behind all of this. Dundee Corporation has committed a minimum of C$30 million in Phase One of its earn-in, including a fully funded 50,000 m 2026 drill programme, and has described Shovelnose as one of Canada’s most compelling undeveloped gold and silver assets.

For investors, that arrangement materially reduces near-term capital risk. The current drill and study programmes are funded, meaning the company is not dependent on raising fresh equity to reach the next set of results.

The early 2027 MRE update is the first true external checkpoint. If the majority of ounces convert to the measured category as management expects, the investment case strengthens. If they do not, the H2 2027 PFS will be working from a weaker resource foundation than the current narrative assumes. The three catalysts to track in sequence, MRE, PFS, then feasibility, will each either extend or compress the confidence around the late 2029 FID target.

What the current evidence tells you, and what still needs proving

The disciplined way to hold this investment case is to separate what has been demonstrated from what remains an assumption the PFS will test. Both columns are populated, and that balance is exactly what you would expect from a well-run development-stage asset two studies short of a construction decision.

The confirmed column carries real weight. The economics are on the table, the drilling has reinforced the resource model, the study is funded and progressing, and the infrastructure position is a genuine structural advantage. None of that is speculative.

The unconfirmed column is where the remaining risk lives. Resource classification, ground conditions, and metallurgical performance are all still subject to results not yet in hand. The late 2029 FID target looks achievable on the current trajectory, but it is contingent, not guaranteed, on each gate delivering results consistent with the PEA narrative.

That balance tells you this is a project with a credible economic foundation and meaningful remaining technical risk. It is neither a sure thing nor a story to dismiss, and the more precise frame beats either uncritical optimism or blanket scepticism.

The first catalyst to watch is the early 2027 MRE update. It is the first external validation point after the drill programme concludes, and it will tell you more about whether the PEA economics hold than any single event between now and the construction decision.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors. Forward-looking statements regarding study outcomes, timelines, and the final investment decision are speculative and subject to change based on market developments and company performance.