Matsa Resources Limited (ASX:MAT) has started mining at the Red Dog Gold Project in Western Australia with reserves of 13,400 ounces to be recovered.
All equipment is on-site, offices have been established and blast hole drilling in preparation for the first blast this week is underway.
Red Dog is around 25 kilometres west of Matsa’s Fortitude Gold Mine, 16 kilometres southwest of the Red October gold mine and 7 kilometres west of Second Fortune Gold Mine.
The decision to begin mining is based on a mining study that shows Red Dog will produce a cash surplus of $5.4 million over a 3-month period.
Treatment agreement with AngloGold Ashanti
Matsa has an agreement with AngloGold Ashanti Australia Ltd (ASX:AGG) whereby all gold ore will be treated at that company’s Sunrise Dam Gold Mine treatment facilities.
The company plans to mine 182,000 tonnes of ore grading at 2.5 g/t gold to produce 13,400 ounces over two months, with an additional two months scheduled to include haulage and rehabilitation.
The all-in sustainable cash cost will be $1,294 per ounce based on a gold price of $1,700 an ounce.
Mining will be carried out by a contractor with technical and management direction from Matsa.
The mine’s single pit, which is less than 20 metres deep, will have ore extracted through drilling and blasting.
Gold mineralisation appears to be flat lying, 2-3 metres thick and typically 6-7 metres below surface.
Test work recoveries using AngloGold’s methodology, including gravity, flotation, regrind and cyanidation techniques, provided a 92%-95% gold recovery.
The weighted average of 92.5% was used in the financial model.
Red Dog was discovered by Whim Creek Consolidated in 1984 and sits within the Archaean greenstone belt.