PERTH (miningweekly.com) – An updated definitive feasibility study (DFS) on the Rothsay gold project, in Western Australia, has increased the project’s projected gold production from 250 000 oz to 289 000 oz.
ASX-listed EganStreet Resources on Tuesday told shareholders that the forecast increase in production, which came on the back of a new mine design, would also result in increased project revenues and free cash flows.
A 2018 DFS estimated that over the six-and-a-half-year project life, Rothsay would generate a pre-tax cash flow of A$100-million, from revenues of A$414-million.
Cash costs in the 2018 DFS were estimated at A$941/oz, while all-in sustaining costs (AISC) were estimated at A$1 083/oz.
The updated DFS has estimated a mine life of seven years, with the pre-tax cash flow expected to increase to A$116-million from revenues of A$470-million, based on the same gold price and exchange rate assumptions as the original DFS.
C1 costs have now been estimated at A$876/oz while AISC is estimated at A$1 069/oz.
The project’s capital cost expenditure has increased from A$36.1-million to A$39.7-million, with EganStreet telling shareholders that the initial capital expenditure was now based on a fixed price contracting strategy, and still included a A$3.6-million contingency.
The project remained on target to produce its first gold in the first quarter of 2020.
“This most recent update to the DFS is compelling in that it is off the back of a very modest infill and extensional exploration programme,” said EganStreet MD Marc Ducler.
“With the project estimation achieving further maturity and all our main work packages either in contact or ready to execute, the financial metrics of the Rothsay gold project continue to strengthen despite the slight increase in capital costs.”
Ducler said that coupled with the future potential to deliver more growth once in production, and the buoyant gold price, it was an exciting time to be developing the Rothsay project.
Negotiations for debt funding were ongoing, with EganStreet receiving indicative non-binding terms for conventional debt instruments of up to A$35-million. Construction of Rothsay is expected to start once all of the outstanding government approvals have been received.