PERTH (miningweekly.com) – The board of ASX-listed Echo Resources has conditionally approved the development of the Stage 1 Yandal gold project, in Western Australia, following a positive bankable feasibility study (BFS).

The BFS considered a staged approach to develop the Yandal mine, allowing Echo to mine the higher-grade, lowest strip ore in Stage 1 in order to maximise early economic returns, and to deliver a high level of operational flexibility.

The project will require a total pre-production capital injection of A$39.3-million, with pay-back estimated within 12 months.

The Stage 1 operation is expected to produce some 380 402 oz of gold over a near four-year mine life, delivering projected net cash flows of A$184-million, and resulting in a pre-tax net present value of A$141-million and a pre-tax internal rate of return of 168%.

The combined Stage 1 and Stage 2 operations are expected to produce some 746 168 oz of gold over an eight-and-a-half-year mine life, generated net cash flows of A$214-million, pre-tax net present value of A$147-million and a pre-tax internal rate of return of 155%.

Stage 2 of the Yandal project will see a significant cut-back of the Orelia openpit operation, in order to access ore at lower depths, in the later years of the operation. A final investment decision to advance the Stage 2 operation will only be required towards the end of the second year of the project life.

“We have completed what we consider to be a detailed, comprehensive and robust study with major cost centers supported by detailed tender or quotes,” said Echo MD and CEO Simon Coxhell on Monday.

“We have been systematic in our approach and are confident that this will bode well for Echo’s success in the future,” he added.

With the BFS proving positive, the Echo board has conditionally approved the development of the Stage 1 operation, subject to obtaining a suitable financing solution, and to securing all the required statutory approvals.

The receipt of a final environmental approval is expected in September this year, with the refurbishment of the Bronzewing accommodation village also targeted for that period.

All final approvals to restart mining at Orelia are expected in either September or October, with Echo aiming to secure project financing also by October, allowing first gold production to take place six months after the start of processing plant refurbishments.