Ausgold has estimated a pre-production capital requirement of A$225m ($158.4m) to develop its 100% owned Katanning gold project in Western Australia.
The mining exploration company has completed a prefeasibility study (PFS) for the project which confirms a 1.28-million-ounce (oz) maiden ore reserve.
The Katanning gold project is situated 275km southeast of Perth. It is nearly 40km northeast of Katanning town in southwest Western Australia.
Its tenements are spread over 4,000km2 of the Katanning Greenstone Belt.
Ausgold expects average annual gold production of 105,000oz at the gold project for a period of 11 years by employing simple open cut mining methods.
Ausgold managing director Matthew Greentree said: “High grade ores identified early in the mining schedule deliver, over the first six production years, 126koz of gold on average per year and help to generate A$555M of after tax free cashflow to the project over this period.
“This early cashflow generation facilitates an early payback of the estimated $225M of pre-production capital after 21 months, sets up an impressive IRR of 40.7% and supports a debt-equity funding model.”
The life of mine is estimated to be 11 years after 1.5 years of construction. The project’s mineral resources stand at 56 million tonnes (Mt) @1.21g/t gold for 2.16Moz.
The funding requirement estimated by the PFS will meet the expected capital and operating costs for the start of plant production to the end of plant construction and to the end of plant commissioning and the commencement of gold production.
The ore produced from the project is planned to be processed on-site through a conventional gravity and carbon in leach (CIL) processing facility. The plant will have a nameplate capacity of three million tonnes per annum (Mtpa).
The company aims to complete a definitive feasibility study of the Katanning gold project in late fourth quarter of 2023.
