ASX-listed budding gold producer, Calidus Resources says its soon to be acquired Blue Spec high-grade satellite underground gold deposit is set to significantly boost annual production and free cash flows at its under-construction Warrawoona gold mine in WA’s East Pilbara region, following a Blue Spec “integration” study. According to the study, the Perth-based company is looking at forecast gold production averaging 110,000 ounces per annum across the first seven years of production at Warrawoona, courtesy of a 22 per cent gold output lift from Blue Spec.
Total cash flows before tax from the new gold mining and processing operation are expected to jump $126 million to $662 million – equating to higher annual cash flows averaging $82.75 million a year – for the initial eight-year mine life, after accounting for Blue Spec’s contribution. After-tax cash flows rise $92 million to a total of $472 million or $59 million a year.
Significantly, the financial projections for the integrated project assume a gold price of $2,355 an ounce based on Calidus’ recently executed hedge book position of 125,000 ounces of forward sales.
Latest stated proved and probable open-cut and underground ore reserves for Warrawoona’s cornerstone Klondyke deposit stand at a touch under 14 million tonnes of ore grading an average 1.2 g/t for 521,000 ounces of contained gold.
Klondyke reserves are contained within an open-pittable and underground measured, indicated and inferred resource estimate of 42.3 million tonnes of ore at 1.02 g/t for 1.4 million ounces of contained gold.
Blue Spec adds high grade material to the mix. It hosts a bonanza-grade inferred and indicated mineral resource of 415,000 tonnes of ore at 16.35 grams per tonne for 219,000 ounces of contained gold.
The old mine sits approximately 70 kilometres from Warrawoona, which is located about 25km south-east of Marble Bar.
The proposed integration of Blue Spec with Warrawoona involves underground ore from Blue Spec being trucked to Warrawoona for treatment at its planned parallel sulphide processing circuit, reducing CAPEX required to bring Blue Spec on stream and leveraging off Warrawoona’s infrastructure.
The incorporation of Blue Spec pushes up Warrawoona’s aggregate gold production for the initial projected mine life of eight years to 807,000 ounces, versus 658,000 ounces without it.
All-in sustaining costs of gold production remain almost steady at an estimated $1,292 an ounce and Calidus says trucking the ore from Blue Spec is a practical option given the low-volume, high-grade nature of the Blue Spec ore together with existing regional road infrastructure.
Calidus Resources Managing Director, David Reeves said: “The integration of Blue Spec into Warrawoona allows Calidus to increase production without significant changes to infrastructure or the current mining plan at Warrawoona.”
“The fully funded Warrawoona project includes a conventional 2.4 million-tonnes-per-annum CIL processing plant plus an additional stand-alone 100,000 tonnes-per-annum sulphide plant initially planned for treatment of Copenhagen, which is also a high-grade satellite deposit.”
“The modular nature of the sulphide plant allows us to increase its capacity to 150,000 tonne per annum to accommodate treatment of Blue Spec for a relatively minor increase in CAPEX.”
The expanded sulphide plant and development of Blue Spec will hardly make a dent on the overall pre-production CAPEX figure for Warrawoona of $120 million, with operational cash flows to cover the bulk of additional capital costs.
Gold production start-up at Warrawoona has been slated for some time in the 2021-22 financial year.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
