PERTH (miningweekly.com) – The Stage 1 prefeasibility study (PFS) into the Cue gold project, in Western Australia, has confirmed the project’s potential, ASX-listed Musgrave Minerals said on Monday.

The PFS estimated a gold production of 337 000 oz over the five-year mine life, with the first three years averaging 80 000 oz/y. The study estimated that the project would require a capital investment of A$121-million to develop the 500 000 t/y operation, with the pay-back period estimated at nine months.

The PFS estimated a pre-tax net present value of A$235-million and an internal rate of return of 95%, with the project’s earnings before interest, taxes, depreciation and amortisation estimated at A$528-million, while the C1 costs have been estimated at A$934/oz and all-in sustaining costs at A$1 315/oz.

The Stage 1 PFS predominantly focuses on the current indicated mineral resources at Cue which constitute only 47% of the total resource base. The Stage 1 PFS includes the mining of six openpit deposits and an initial two years of gold production from the upper levels of the Break of Day underground mine.

“The excellent Stage 1 PFS outcomes demonstrate that Musgrave’s Cue is one of the highest margin, undeveloped gold projects in Australia. This potential new standalone development has a rapid payback period of nine months from first processing due to the extraordinary near-surface, high-grade nature of the Break of Day and White Heat deposits,” said Musgrave MD Rob Waugh.

He said that with the cost profile displayed in the PFS, Cue was expected to be in the lowest cost quartile of gold producers in Australia.

“The Stage 2 PFS, is set to add mine life through the extension and conversion of existing inferred resources to the higher confidence indicated category, together with the potential inclusion of newly discovered resources. The Musgrave team has been very successful in defining new targets, making new discoveries and growing the resource base. The project has significant upside growth potential with recent discoveries like Amarillo and Waratah expected to add to the resource base in 2023 to align with delivery of the Stage 2 PFS in early 2024,” said Waugh.