Auzex Resources' (ASX:AZX) major project is the 50%-owned Bullabulling gold project, located 65km from Kalgoorlie in Western Australia. The project area has a proven history of discovery and new exploration techniques are leading to new discoveries.
Auzex Resources: positive economics for Bullabulling gold project
A recent Scoping Study for Auzex Resources’ Bullabulling Gold Project in Western Australia has highlighted a potential before tax net present value of A$389 million and an internal rate of return of 29% for a 10-year, 2.1 million ounce operation.
Auzex Resources (ASX: AZX) has completed a Scoping Study at the Bullabulling Gold Project for a large scale open pit mining and carbon-in-leach operation producing 7.5 million tonnes at 1.04 grams per tonne for about 2.1 million ounces of gold.
Using a 6% discount rate and gold price of A$1,500 per ounce, the net present value is $389 million with an internal rate of return of 29%. A gold price of $1,700 per ounce, however, would increase the net present value to $703 million with an internal rate of return of 42%.
Managing director John Lawton said the results of the Scoping Study are positive for the Bullabulling gold project.
“As would be expected from a high tonnage – low grade project, the economics are particularly sensitive to recovered grade and operating costs, and we are of the view that with further studies the project will see improvements in these areas from the current estimates which will impact positively on the overall economics and cash costs in particular,” he said.
“The Prefeasibility Study is now well in hand and will be based on an upgraded resource, which will form the basis of the maiden reserve, due to be finalised during the first quarter 2012.”
Bullabulling has sufficient resources to establish an operation with a minimum 10 year mine life target. Annual production is expected to average around 230,000 ounces over the 10 year period.
Importantly, the metallurgy has no issues and recoveries for the operation should range from 92.5-94%.
The Scoping Study also returned operating costs of $30 per tonne of ore treated and capital costs of $366 million, both with potential for improvement. Cash costs of gold production averaged $968 per ounce.
Auzex is progressing with the Prefeasibility Study, which it expects to complete by the September quarter of 2012.
Auzex Exploration Demerger
The scheme of arrangement for the demerger of Auzex Exploration, which was approved by Auzex shareholders on 16 December 2011, became effective on 21 December.
The demerger is part of the company’s plan to enter an all scrip merger to combine the Bullabulling Gold project, (previously a 50:50 joint venture), under a single corporate entity to be named Bullabulling Gold.
Auzex demerged its non-Bullabulling assets into a newly incorporated unlisted public company.
Substantial Shareholder Increases Stake
Meanwhile, substantial shareholder Baker Steel Capital Managers LLP has increased its shareholding in Auzex to 13.7% from 9.3%.
