ASX-listed gold explorer and developer, Ora Banda Mining is edging closer to production start-up at its historic Davyhurst gold project 120 kilometres north-west of Kalgoorlie, with definitive feasibility study, or “DFS” numbers pointing to a cracking cash cow for WA’s next gold miner in waiting.
The Perth-based company previously indicated it was targeting a first gold pour at the redeveloped Davyhurst mining and processing operation towards the end of this month. If realised, it would mean Ora Banda would have pulled off an impressive development timetable of just over six months, before ramping up to full production in the ensuing three months.
Ora Banda has rolled out a mine plan to exploit six satellite deposits, within 50km of the rejuvenated 1.2 million-tonnes-per-annum Davyhurst gold processing plant, over the coming five or so years at least.
Pre-production mining has kicked off at the Riverina open-cut mine, 48km from the Davyhurst plant, and dewatering is well advanced at the Golden Eagle underground mine, 2km from the refurbished treatment plant.
Riverina, Golden Eagle and the four other satellite deposits speak for the total initial ore reserves that underpin the project development, which has a low estimated pre-production CAPEX of $45.1 million.
Combined probable ore reserves for the half dozen satellites currently stand at 6.1 million tonnes at an average grade of 2.4 grams per tonne gold for 460,000 ounces of contained gold.
Key projections to come out of the DFS completed by Ora Banda in mid-2020 showed Davyhurst spitting out after-tax free cash flows of $357.8 million, or an average of $68.8 million per annum, over an initial forecast life of mine of 5.2 years.
The compelling financial returns were predicated on gold production at Davyhurst averaging 81,000 ounces per annum, a received gold price of $2,550 an ounce and all-in sustaining costs of production of $1,578 per ounce. Project capital payback has been put at a head-turning seven months.
Applying the same $2,550 an ounce gold price scenario assumption, the DFS showed a post-tax net present value – at a 6 per cent discount rate – of $290.7 million and a post-tax internal rate of return of 237.8 per cent for Davyhurst.
A surfeit of early cash flows from Davyhurst will no doubt spur Ora Banda to rev up an infill and resource definition drilling campaign aimed at ultimately converting additional upgraded gold resources across the half a dozen satellite deposits and potential extensions into economic reserves.
Not that the debt-free $280 million market-capped company is struggling for cash having raked in a whopping $55 million in a capital raise last year.
Already Ora Banda has delivered a maiden mineral resource estimate for the Riverina South prospect following a massive RC drilling program in 2020 comprising 101 holes for an aggregate 10,983 metres at the Riverina South extension and British Lion prospects.
It has attached an inferred open-pittable and underground resource to Riverina South/British Lion of 645,000 tonnes grading 2.1 g/t gold for 43,000 ounces of contained gold.
Riverina South lies immediately south of the Riverina open-pit mine and, according to the company, remains open along strike to the south and at depth. It sits outside the global gold resource inventory that Ora Banda has estimated for the main six satellite deposits, so there appears to be significant resource and reserves growth potential to try to prove up with its drilling blitz.
The magnificent six – Riverina, Golden Eagle, Missouri, Sand King, Waihi and Callion – currently host a total of 11.9 million tonnes going 3.1 g/t gold for 1.19 million ounces of contained gold, which includes the 460,000 ounces classified as mineable reserves.
Perth broking firm Hartleys noted last year: “A clear failure of previous companies operating at Davyhurst has been the lack of reserves and capital to sustain healthy production levels over a number of years, whereas Ora Banda appears to be adopting a more measured approach.”
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
