PERTH (miningweekly.com) – Gold developer Unity Mining has temporarily halted the development of its Dargues project, in New South Wales, as it waited to complete technical optimisation studies and funding discussions.

The development delay would likely be in place until the first half of 2014, the ASX-listed company reported on Friday.

MD Andrew McIlwain explained in a statement that in light of the sustained fall in the gold price and equity markets, Unity had decided to re-optimise its development and funding options for the Dargues project, given the number of asset sales and processing options currently available, including the possible sale of its Bendigo assets, which he said could reshape the project financing requirements for Dargues.

“Our mandate with the Commonwealth Bank of Australia, to provide project finance, remains in place and we would anticipate formal credit approval in early 2014.

“Once we have finalised the best financing option and the optimum development and processing route, we will be in the best position to commence plant construction and underground access development.”

Unity acquired the Dargues project during its takeover of Cortona Mining late last year.

A definitive feasibility study has shown that the project could produce 50 000 oz/y of gold, with an underground mine delivering around 330 000 t/y of ore. Final regulatory approval was received in August last year.

To date, Unity has completed the construction of a 3.2 km access road and infrastructure earthworks at the project site, with final excavation and ground support of the boxcut to be completed before the end of the year, in readiness for the start of underground mining.

McIlwain noted that Dargues would remain a valuable asset with a lower-cost profile than the Henty mine, in Tasmania, which itself was projected to deliver positive cash flow despite the lower gold prices.

“Additionally, we have every confidence that the mine life at Dargues will extend beyond the current planned five years. Given the number of gold process plants and assets up for sale in Australia, and softening contractor rates, we will take the opportunity to spend some more time optimising the development options for Dargues in parallel with our finance discussions in order to maximise shareholder value.”

Meanwhile, McIlwain predicted that the Henty operation would be cash flow positive by the second half of this year.

“With an increase in the number of production headings in the high-grade Read Zone, combined with the recently announced cost reduction initiatives, we are forecasting Henty to generate positive cashflow during 2013/14, and we continue to invest in the order of A$6-million a year in development and exploration activities in Tasmania, building on our successful track record of delineating additional resources and reserves,” said McIlwain.