Meeka Metals has secured a greater-capacity ball mill than the one envisaged in its definitive feasibility study (DFS) in May for its Murchison gold project in Western Australia, paving the way for significantly enhanced economy of scale.
The company says the $318,000 purchase of the 750kW Outokumpu mill at auction reduces its DFS mill capex by 75 per cent, lifts processing capacity by 30 per cent to 640,000 tonnes per annum and increases ore processing options. Its DFS had made provision for a 500kW ball mill and management believes the bigger machine will knock 33 weeks off its mill lead time.
The new mill comes with its drive motor and all associated drive equipment, including a spare gearbox, inching drive, girth gear and lube system, starter and related liquid resistance control system. It also comes with a spare set of mill liners, trommel, trommel cover, underflow and cyclone feed hopper.
Meeka says the entire package, planned to be delivered to the Murchison site in September, represents a significant advance in lead time on vital componentry, buys valuable set-up and commissioning time and lends a high degree of overall practicality and breathing space at a critical point in the processing plant assembly.
The company’s strategic move also means it was able to bring forward the purchase of planned expansion-related leach and adsorption tankage already available in Australia – the cost of which was included in the DFS. It expects the greater capacity of the new mill will improve its DFS-projected productivity and economics.
Meeka Metals managing director Tim Davidson said: “As with the high-quality camp and ancillary infrastructure we purchased at a fraction of replacement value, this ball mill purchase also materially reduces development cost and lead time. In line with our installation schedule, planning is in place to relocate the mill to our Murchison Gold Project in September 2024.”
The DFS numbers released in May include undiscounted pre-tax free cash flows of $577 million and an internal rate of return (IRR) of 127 per cent, based on an Australian gold price of $3500 per ounce. Today’s price is hovering at about $3560 per ounce.
The expanded mill throughput that will come with the bigger ball mill also opens up new ore feed opportunities that are expected to flow on to further mine development. It means the company can more rapidly process its 600,000 tonnes at 2 grams per tonne gold ore stockpile that the DFS contemplates being built up in the vital first six years of operation, giving it a healthy revenue kickstart and potentially earlier pay-off.
Additionally, it means Meeka can bring into play an extra 52,000 ounces of gold at 1.3g/t that sits inside the DFS optimised pit-shell, while another 61,000 ounces of gold is available in underground ore grading 3.3g/t. The exclusion of those two feed sources in the DFS was due to throughput constraints imposed by the smaller-capacity mill.
With the extra resources in mind and with the bigger mill throughput, Meeka says it is now re-optimising its production plan with a view to presenting a revised DFS in the final quarter of this year. The company says it expects no change to its planned $44 million start-up cost, while processing expenses are expected to be less than the estimated $39 per tonne.
Management also anticipates gold production exceeding the 55,000 ounces per year from the open-pit operations outlined in the DFS, due to the processing of previously-excluded ore. It expects the processing of underground ore reserves will also be greater than the currently-planned 345,000 ounces of gold.
Meeka said recently it had secured a $2.2 million bridging loan facility to fund and accelerate the purchase, relocation and installation of its new 100 per cent-owned Murchison gold project, adding that it has been able to acquire high-quality infrastructure at about 20 per cent of the current costs anticipated in the DFS.
That infrastructure includes a 116-person camp, a 200-person change house, washing facilities and an office building for its Andy Well operation, in addition to an open pit mine office for its Turnberry operations and a 110,000-litre fuel tank. Planning is already in place to relocate the infrastructure 100km from Sandfire Resources’ DeGrussa mine to the Murchison project this month.
Meeka is now looking at gaining full credit approval for the expanded project development facility this month and getting all the infrastructure – including the ball mill – relocated, installed and commissioned at the new site between now and September.
But for now, the company plans to continue working towards revising its DFS, with a key consideration around the positive new processing and economic factors brought about largely as a direct result of its timely acquisition of the ball mill.
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By Doug Bright
