Explaurum (ASX:EXU) has received the results of its scoping study based on an open-pit gold mine within the Tampia Gold Project located 250 kilometres east of Perth, Western Australia.
Preliminary economics indicate the project has robust financial metrics over an initial six-year mine life with low capital and operating costs providing early project payback.
The base case net present valuation (NPV) for the open pit gold mine is estimated at $181 million.
The proposed mine would generate $829 million in revenue over six years with an estimated life of mine (LOM) all in sustaining cost (AISC) of A$888 per ounce.
The scoping study demonstrates that Tampia is one of the highest margin, undeveloped gold projects in Australia.
John Lawton, managing director, commented
“The outcomes of the scoping study based on the recently released Mineral Resource for the Tampia Gold Project indicate the potential for development of a low cost high margin gold project with robust economics.
“The study concludes that a mine life of six years with production exceeding 500,000 ounces gold would provide a highly attractive payback period of approximately 1.5 years based on an initial capital cost of A$95 million.
“The feasibility study for the project and the exploration potential in the immediate vicinity are now the priorities for the company as we look forward to optimising the project’s development.
“The scoping study has demonstrated that Tampia has the potential to be one of Australia’s highest margin development opportunities in gold with considerable upside.”
Scoping study results summary
The scoping study has assumed a single pit mining operation with a standalone processing plant designed for treatment of 1.5 million tonnes per annum.
It incorporates the recently Indicated and Inferred Resource of 11.3 million tonnes grading 1.91g/t gold for 695,500 ounces of contained gold.
Key base case metrics include:
- Potential life of mine (LOM): 6 years;
- Initial capital cost: $95 million;
- Average C1 cash cost: $799 per ounce;
- Average AISC cash cost: $888 per ounce;
- Gross LOM revenue: $829 million;
- Average annual EBITDA: $65 million per year;
- Base case pre-tax NPV: $181 million;
- Pre-tax internal rate of return (IRR): 64%;
- Payback period: 1.5 years;
- Average LOM gold production: 84,000 ounces per year;
- LOM gold production: 502,000 ounces;
Room to grow mine life and project value
The scoping study presents a base case scenario and does not include organic growth from the Tampia Gold deposit or other regional prospects.
The Tampia gold resource remains open and future resource upgrades across the company’s broader project area provide the opportunity to increase mine life and consequently project economics.
Recently, visible gold was logged in diamond core confirming the continuity and distribution of high-grade gold zones are more widespread than the recent resource estimate suggests.
The feasibility study underway is expected to be released in the March quarter of 2018.