Dateline Resources’ share price soared 17 per cent today to 0.07 cents on the company’s biggest share turnover in more than a year as it shifted into high gear to launch a bankable feasibility study (BFS) at its Colosseum gold project in California.
The research work is aimed at transforming the 1.1-million-ounce deposit into a long-life, high-margin gold operation just as the yellow metal price smashes through the US$3400 (A$5355) per ounce mark.
The study will target an ambitious blueprint designed to turn the deposit into a serious cash-generating machine by using an open pit mining scenario focused on the project’s north and south ore pipes. The plan is forecast to process the ore at 2 million tonnes per annum to pump out 75,000 ounces of gold per year across an initial 8.5-year mine life.
The investigation is being conducted by two heavyweights in mine development - Nevada-based Kappes, Cassiday & Associates and Australia’s Australian Mine Design & Development - and is set to mirror the open pit-only second scenario outlined in Dateline’s earlier scoping study.
Work in October last year pencilled in a mouth-watering net present value of US$235 million (A$365M) using a 6.5 per cent discount rate and based on a conservative US$2200 (A$3400) per ounce gold price. Processing costs are expected to come in at a modest all-in sustaining level of US$1490 (A$2313) per ounce.
Total capital expenditure for the mine is forecast to max out at $195M (A$300M) and should pay for itself in just over three years.
With the gold price now more than 55 per cent higher than the scoping study number at an eye-watering $5355 per ounce, the company says the economics of Colosseum could be set for a major re-rate. Management is now looking to expand the project’s footprint to extend its mine life.
The project already hosts a solid 27.1Mt resource grading 1.26 grams per tonne (g/t) for the 1.1M ounces of gold, with 455,000 ounces grading 1.47g/t in the measured category. A further 281,000 ounces running at 1.21g/t sits in the indicated category.
Management says there is more potential lurking at depth, with sniffs of mineralisation still lighting up below the existing resource envelope.
Importantly, the bankable feasibility study is being conducted entirely within Dateline’s existing mining rights and permitted operational plan, which will speed up the restart of the approvals process.
If its final studies stack up and finance falls into place, Dateline says it could have shovels-in-ground and be pouring first gold shortly after completing its desktop work.
In a potentially lucrative twist, the company is also exploring the sale of waste rock and tailings as aggregate to local concrete producers. The region is going through a construction boom that could ultimately deliver Dateline an additional revenue stream without any further major capital expenditure.
Adding even more sizzle to the story is Colosseum’s intriguing, rare earths potential. The project lies less than 10 kilometres from the famous Mountain Pass mine, the only large, rare earths operation in the United States. Dateline is already studying carbonatite and mantle-derived rocks at Colosseum that bear similarities to Mountain Pass geology - hinting at a compelling critical minerals angle that could boost the project's strategic value.
With gold flying high in a country hungry for domestic mineral supply, Dateline’s Colosseum project could soon step onto a much bigger stage.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By James Pearson
