PERTH (miningweekly.com) – The directors of gold miner Saracen Mineral Holdings have given development approval to the Thunderbox operation, in Western Australia, following a positive feasibility study.

“The development approval for the Thunderbox operation is a significant milestone for the company that will see Saracen produce gold from multiple operations for the first time in our history,” said MD Raleigh Finlayson.

“More importantly, this will realise our vision of joining the likes of Northern Star, Regis, OceanaGold and Evolution as a midtier gold producer, with production in excess of 300 000 oz/y, following the start of Thunderbox production in 2017.”

The feasibility study estimated that the Thunderbox project would require a capital investment of A$65-million, which would be fully funded from existing cash reserves and free cash flow generation from the Carosue Dam operation, in Western Australia.

The Stage 1 openpit operation would deliver 597 000 oz of gold, over an initial mine life of four-and-a-half years, and along with organic growth at Carosue Dam would effectively double Saracen’s gold output to about 300 000 oz/y.

“Thunderbox Stage 1 is forecast to deliver A$195-million of free cash flow over an initial four-and-a-half-year mine life, that endorses the company’s acquisition of the Thunderbox operation in January of last year for a total cash consideration of A$23-million and royalty payments of 1.5% capped at A$17-million,” Finlayson added.

Prestrip mining at Thunderbox would start in August this year, and processing was expected to follow in July 2016, with production to average at about 124 000 oz/y.

Finlayson noted that stages 2 and 3 of the project would have the potential to expand production to more than one-million ounces over an eight-year mine life, at a production rate of 126 000 oz/y.

He pointed out that it was an ideal time to develop a new gold project in Australia, taking into account the falling Australian dollar and diesel price, high openpit mining equipment availability, and the tightening of the labour and contracting markets.

“The timing of the development also fits in perfectly with the completion of openpit mining at Whirling Dervish, which will allow a smooth transition for our openpit mining workforce to Thunderbox,” he said.