WA Gold has put some beefy numbers on its 100 per cent owned Abercromby gold project near Wiluna in Western Australia’s north-eastern goldfields, with a new scoping study pointing to a low-capex, staged start-up option that could deliver rapid payback via nearby toll treatment.
The preferred Stage 1 mine plan combines a small open pit with a follow-on underground operation and targets 114,494 ounces of gold over about 4.5 years, of which an estimated 90 per cent is classified as indicated under the JORC Code.
Abercromby already hosts an impressive JORC-compliant mineral resource of 11.12 million tonnes at 1.45 grams per tonne gold for 518,000 ounces. WA Gold says the proposed Stage 1 mine inventory would only exploit an estimated 20 per cent of that total.
Using a base-case scenario, the open-pit portion is expected to produce 24,466 ounces and the underground component will generate 90,028 ounces of gold, with the same metallurgical recoveries of 94 per cent achieved in testwork.
A A$6000-an-ounce gold price has been assumed, which WA Gold notes is a 10 per cent haircut on the prevailing spot price of around A$6600.
The study forecasts a pre-tax free cash flow of $270M and a pre-tax net present value (NPV), discounted at 7 per cent of about $229M, on the back of a modest $8M pre-production capital expenditure bill and a 1.5-year payback period.
All-in sustaining costs (AISC) are estimated at $4204 per ounce of gold for the pit and $2938 per ounce for the underground ore material, reflecting the considerably higher grades underground.
WA Gold chief executive officer Ben Pollard said: “These scoping results highlight the value and viability of Abercromby as a new mine. Our approach to include largely Indicated resources in the scoping work has delivered a very rigorous result and, together with buoyant gold prices, confirms a compelling opportunity.”
Rather than building a plant, the reviewed concept assumed trucking ore to an existing carbon-in-leach (CIL) facility within 70 kilometres of Abercromby, keeping the upfront spend tight and minimising risk.
WA Gold says it is in toll treatment discussions at Wiluna Mining’s Matilda CIL plant, 20 kilometres from Abercromby and sees third-party processing as the quickest way to turn its resource into gold sales.
The company is keen to continue drilling to lift confidence and convert inferred mineralisation into indicated resources or better, while also chasing extensions of known gold zones, since the Capital deposit is still regarded as open along strike and to depth.
Recent drilling activity at Abercromby has been intense. Earlier this month, the company flagged a 10,000-metre resource development program running 24/7, of which 1100m has been completed so far.
The campaign has been designed to chase down extensions and continuity of higher-grade lodes and, if all goes well, the results from the program will inform the next round of mine planning.
For now, the scoping study is doing its job. It has delivered a pretty compelling potential pathway to first cash flow. It does not require a big up-front cheque and still leaves room for plenty of blue-sky if the drilling continues to add quality ounces.
On other matters, a general meeting of shareholders on April 15 voted to change the company’s name from “BMG Resources Limited” to “WA Gold Limited”, with the proposed new ASX ticker code ‘WAU’.
With a new gold-winning name that leaves no room for doubt as to the company’s future plans, follow-up studies and toll treatment talks in progress, Abercromby is shaping up as a promising venture. A modest start at sensible initial costings could quickly snowball into something much bigger.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Doug Bright
