PERTH (miningweekly.com) – An updated prefeasibility study (PFS) into the Warrawoona gold project, in the Pilbara, has confirmed that the project would generate strong margins and cash flows, owner Calidus Resources said on Monday.
A 2019 PFS into the Warrawoona project estimated that it would require a capital investment of A$95-million, and would recover some 580 490 oz of gold over an initial six year mine life.
The updated PFS incorporated a 24% increase in the ore reserves, and reflected several significant changes aimed at minimizing risk, maximizing initial cash generation and ensuring a simple and robust operation. These changes include the modeling technique used in the mineral resource, delaying underground development until year three to minimise construction capital and allow a single focus on the low risk Klondyke openpit, and installation of a ball mill to ensure grind size and operational flexibility.
The updated DFS found that some 623 086 oz of gold could be recovered over an initial mine life of eight years, with pre-production capital estimated at A$116-million.
Based on a gold price of A$2 500/oz, the Warrawoona project is expected to generate revenues of A$1.55-billion at an all-in sustaining cost of A$1 251/oz. Post-tax, the project is expected to have a net present value of A$303-million and an internal rate of return of 77%, with a pay-back period of 1.1 years.
“The updated PFS highlights the superb cash generating potential of the Warrawoona gold project and reinforces why we are accelerating the development timeline of the project to take advantage of the current gold price environment,” said Calidus MD Dave Reeves.
“Risk minimization is a fundamental theme of all work at Calidus. As such, we have altered the resource modelling technique to a more conservative method, we have delayed the underground to allow the company to focus on a single openpit operation initially, and we are including a more flexible comminution circuit.
“The decisions being made ahead of development mean that targets laid out for the operating project have maximum probability of being met or exceeded.”
Reeves said that the only changes anticipated in the definitive feasibility study were associated with costs and fine-tuning the mining schedules.