PERTH (miningweekly.com) – A prefeasibility study (PFS) into the Mallina gold project, in Western Australia, has estimated that the project could produce 540 000 oz/y of gold over the first ten years of its mine life.
ASX-listed De Grey Mining on Thursday reported that at peak production, Mallina could produce 637 000 oz/y of gold in year five of operation.
Over a total mine life of 13.6 years, the project would recover around 6.4-million ounces of gold.
The PFS estimated that the capital cost for the ten-million-tonne-a-year operation would reach A$1.05-billion, up from the A$893-milion considered in the scoping study, while all-in sustaining costs for the project over the first ten years of operation are estimated at A$1 280/oz, up from the A1 224/oz estimated in the scoping study.
The study estimated a post-tax net present value of A$2.7-billion and an internal rate of return of 41%.
De Grey MD and CEO Glenn Jardine told shareholders that the company had been targeting material improvements in yearly gold production rate, grade, mine life, confidence levels and project economics from last year’s scoping study.
“Total production has increased by nearly 50% from the scoping study to 6.4-million ounces with the annual gold production rate increasing by around 25% to 540 000 oz/y over the first ten years.
“The increased production has been achieved at increased levels of Joint Ore Reserves Committee (Jorc) measured and indicated resources within the production profile averaging close to 90% over the first ten years of production compared with 70% in the scoping study.
“Today, we also announce the maiden Hemi Jorc probable reserve of 5.1-million ounces at 1.5 g/t gold - one of the largest and highest grade maiden reserves in recent decades,” said Jardine.
The maiden Hemi reserve leverages off the Hemi mineral resource update announced in May of 8.5-million ounces at 1.2 g/t gold, of which 5.8-million ounces are in the indicated classification.
“We remain enthusiastic about the prospect of increasing resources and reserves at Hemi and the regional deposits with continued resource extension drilling,” Jardine said.
Meanwhile, Jardine noted that despite the capital cost increase, the payback period of the project remains below two years with an excellent internal rate of return of approximately 50%, underlining the quality of the project and its insensitivity to capital cost.
“The project has one of the lowest capital cost intensities of any large-scale, undeveloped gold project on a global basis and with operating costs remaining within the lowest cost quartile of Australian gold producer operating costs.
“The company has incorporated environmental and social governance principles in its decision-making process during the PFS. In addition, the PFS decarbonization plan shows the project commencing at a carbon intensity of 0.6 t/CO2 per annual ounce of gold production reducing to 0.3 t/CO2 per annual ounce of gold.
“The reduction is planned to be achieved through a combination of increased use of renewable energy and transition of the mobile equipment fleet away from diesel. Further opportunities to decrease carbon intensity will be pursued,” said Jardine.
With the PFS now complete, De Grey will progress to a definitive feasibility study (DFS), targeted for completion in mid-2023.
In parallel with the DFS, the company will engage further with potential project financiers to achieve an appropriate project funding outcome by mid-2023 in line with the completion of the DFS.