PERTH (miningweekly.com) – A prefeasibility study (PFS) into the Warrawoona gold project, in the Pilbara region of Western Australia, has estimated that some 580 490 oz could be recovered over an initial six year mine life.

ASX-listed Calidus Resource on Wednesday told shareholders that Warrawoona could be developed at a capital cost of A$95-million, with the PFS estimating a pre-tax net present value of A$151-million, based on a A$1 800/oz gold price.

Life-of-mine revenues for Warrawoona have been estimated at more than A$1-billion, while the internal rate of return has been estimated at 40% pre-tax. Over the life of the mine, C1 costs are expected to reach A$607-million, or around A$51/t.

“The maiden reserve and PFS show that Warrawoona will be a robust Australian gold project based on a simple operation with strong margins and cashflow. It also has substantial potential for growth in the mine plan material and mine life, as demonstrated by recent exploration results,” said Calidus MD Dave Reeves.

“We have deliberately taken a conservative approach to the modifying factors applied to the anticipated mined grade because this is the highest sensitivity in any project.

“We will undertake systematic drilling in the next quarter to further improve our knowledge of the orebody as another step in the de-risking process. A subsequent grade control programme prior to construction in conjunction with the drilling to a planned measured resource, will be applied to both the wider resource model and the feasibility modifying factors.”

Reeves noted that permitting was expected to take some 12 months, during which time Calidus would continue to de-risk the project and finalise a feasibility study, secure project finance, and continue its regional and extensional exploration to grow the mine life.

Initial drilling will both be down-dip, to improve confidence, and shallow drilling along strike to the east, to allow an increased conversion from resource to reserve.