PERTH (miningweekly.com) – The board of gold miner Doray Minerals has approved the development of the recently acquired Deflector copper/gold mine, in Western Australia, subject to the completion of funding.

The Deflector project was acquired through the takeover of Mutiny Gold earlier this year, in which shareholders of that company were offered one Doray share for every 9.5 Mutiny shares held.

Mutiny had previously estimated that Deflector would require a capital investment of A$67.6-million, with the project expected to have a net present value of A$111-million and an internal rate of return of 50%.

Doray MD Allan Kelly said on Tuesday that a detailed review had confirmed Doray’s assessment that Deflector would be a high-grade, low-cost gold project, with robust financials and significant upside.

“When we completed due diligence on Deflector as part of the initial discussions with Mutiny last year, we were very excited about the project and the ability to use our recent experience at Andy Well to optimise the construction and operation of Deflector, and to create significant value for our shareholders,” Kelly said.

He noted that the review had confirmed Doray’s thoughts on the project, with the numbers remaining in line with those presented during the transaction.

The review estimated that a preproduction capital investment of some A$88.2-million would be required to start production at Deflector, with the project estimated to result in life-of-mine revenues of A$648.1-million, at a gold price of A$1 150/oz.

The Deflector openpit was expected to deliver 61 972 oz of gold, while the underground mine would deliver 348 592 oz of gold, over a mine life of about six years. Yearly production had been targeted at between 61 000 oz and 74 500 oz of gold.

Doray noted that all critical principal approvals and permits were in place for the Deflector project, with only minor amendments regarding the revised location for the plant and village awaiting final acceptance.

The installation of the processing plant was scheduled to start in July this year, and production would likely start in the fourth quarter of 2016.

Openpit mining was scheduled for February next year to provide initial ore feed for the mill, while the underground mining operation would start in June 2016.

Following construction and commissioning of Deflector, Doray would become a multi-mine gold producer, with the company targeting a production of 160 000 oz/y, at an average all-in sustaining cost of less than A$1 000/z between the existing Andy Well mine and Deflector.

Doray had appointed PCF Capital as debt finance adviser for the project, and had already received interest from a range of potential domestic and international financiers. The company said that it would maximise the use of debt and cash flows from the Andy Well mine in order to minimise the requirement for additional equity.

Meanwhile, Doray was also currently in discussions with a number of potential offtake customers for the high-grade copper/gold/silver concentrate expected from Deflector.