The board of White Rock Minerals (WRM) has reported the key outcomes of the company’s pre-feasibility study (PFS) into the development of the first stage of its 100% owned Mt Carrington gold and silver project, located in New South Wales, Australia.
The outcomes confirm the technical and financial viability of the initial project development and provide a very strong rationale to advance the project through a definitive feasibility study (DFS) towards development.
White Rock Minerals has announced the completion of the Stage One pre-feasibility Study (PFS) for the development of its 100% owned Mt. Carrington Gold First stage of the project in northern New South Wales.
The compilation of the PFS included detailed economic analysis and further technical work building on previous studies which determined that the best 'go-forward' case was a gold first initial stage capitalising on the existing pre-stripped gold pits, tailings dam and process water facilities with a minimal capital expenditure to commence full rate production, based on a 1 million tpy process plant and 35 000 oz of gold p.a. for the initial 4 1⁄2-year mine plan.
The silver dominant mineral resource, containing some 8.3 million oz in the Indicated category is the subject of further mineralogy studies, metallurgical test work and concentrate sales discussions. Mining of these silver resources constitutes Stage Two of the Mt Carrington project.The PFS confirms Mt Carrington as a viable and relatively fast start, modest CAPEX and OPEX project that is technically sound and economically viable, generating over A$36 million in undiscounted cash-flow over its initial stage 4 1⁄2-year life. The forecast capital cost of AUS$35.7 million including a AUS$4 million contingency makes a modest CAPEX start-up gold project. With this in place, the Stage Two silver phase will benefit from the already installed processing plant and associated infrastructure paid for by the Gold First stage of the project. This will further extend the life of the mine and further enhance the project’s financial metrics. All technical analysis was done using a US$1275/oz gold price and a foreign exchange rate of AUD:USD 0.75.
As a key outcome from the PFS, WRM has declared a maiden Ore Reserve in accordance with the JORC Code (2012) for the Mt Carrington Gold First project of 3.47 million t of ore at a grade of 1.4 g/t gold containing 159 000 oz of gold. Whilst this Stage One mine plan is small as a stand-alone project, its economic returns and payback period are viable, with free cashflow in excess of AUS$36 million generated and a payback period of 22 months. Stage Two of the project will potentially increase the overall scale of the mine and project economics, with minimal capital requirements.
Based on the results of the PFS, the WRM board has approved the commencement of the Definitive Feasibility Study (DFS), subject to funding.
Peer Group Positioning
The Gold First PFS production profile results are significantly better than the gold stage of the 2016 Scoping Study, with annual gold production increased 30% and overall gold produced increased 59%. However, operating costs and capital expenditure have increased from the earlier study, up 68% and 67% respectively. The Gold First mine life has increased from 3 to 4 1⁄2 years, but is less than the Scoping Study’s 7 years as that study also included mining the silver resources. There is a second stage to follow for silver and gold/silver production from these existing resources, but these are not included in the Gold First stage. Peer group comparisons position the Mt Carrington project within the midrange of All In Sustaining Costs (AISC) relative to currently producing gold mines in Australia based on 2017 reported production, and has a capital intensity (Capex$/Gold ozpa) that is likewise midrange when compared to its peers’ projects.
Overall, the board believes that the Mt Carrington Gold First Stage One represents a solid project firmly within the 'deliverable' range for a project of this size.
Managing Director and CEO of WRM, Matt Gill, said: “The board is delighted to approve the Mt Carrington PFS and also the commencement of the definitive feasibility study. Now that the PFS results are in we can see a modest CAPEX and OPEX way to deliver real value from the project for our shareholders. This is likely to be the first of several stages to fully explore and exploit the valuable resources that we have at Mt Carrington.
The initial 4 1⁄2 year gold first stage will deliver over AUS$36 million in free cashflow and provides our shareholders with a 22-month payback and solid return on investment. Subsequent stages of the project will require additional study and investment and are expected to yield similar positive results. The Mt Carrington resource base also includes over 8 million oz of silver in the Indicated category and this resource is expected to be the basis of Stage Two of the project. WRM will ensure that every opportunity to improve project scale and return on investment will continue to be examined and pursued.”
“We thank all our stakeholders especially all of our local communities and major shareholders for working so closely with us to see the strong possibilities in this project for all,” he added.