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Theta Gold Mines optimised mine schedule for Theta Open Pit Starter Project adds 40,000 ounces

The company is progressing an application to add open pit mining to the already granted underground mining permit for the Theta Open Pit Starter Project.

Theta Gold Mines Ltd - Theta Gold Mines releases optimised mine schedule for the Theta Open Pit Starter Project
The operation has a peak funding requirement of $27 million

Theta Gold Mines Ltd's (ASX:TGM) optimised mine schedule for the Theta Open Pit Starter Project in South Africa has added 40,000 ounces of gold on top of the May 2019 feasibility study.

The new schedule improves project metrics, has a reduced environmental footprint, reflects an increase in the annual production rate to 600,000 tonnes from 500,000 tonnes, includes the mining of several old mine waste rock dumps and increases overall mine operational flexibility.

Company chairman Bill Guy said: “The new mine schedule demonstrates clear robust project economics, with more gold extracted and greater value for the shareholders.”

The near-surface high-grade gold provides costs advantages compared to other producers in the region, with the company now progressing a permit amendment to include open pit mining.

Guy said: “As gold is finding favour again, the company is keen to be part of the South African mining industry that has produced in tonnage terms of gold bullion more tons of gold than any other country.

“Over 40% of world gold has come from the small corner of South Africa we call home.”

Production target

The production rate has increased to 600,000 tonnes per annum which is an annual increase of 20% compared to the 2019 feasibility study.

Theta Gold Mines expects a five-year production rate of 49,500 ounces and a target of 260,000 ounces over the 6.5-year life of the mine.

Waste rock dumps have been scheduled to be processed in the last year of mine schedule and add easy gold ounces for the planned mine operations.

Processing plant design

The plant cost includes the installation of a new crushing, milling (including integration of a second-hand mill), gravity, carbon-in-leach, elution, gold room, cyanide destruction and tailings filtration circuits.

The positioning and design of the plant have been carefully considered to allow for future expansion opportunities of up to 1.2 million tonnes per annum of oxide ore with modest capital expenditure and minimal operational downtime.

TGME Plant Layout Showing 600,000 tonnes per annum CIL plant and expansion to 1.2 million tonnes per annum

Project economics

The total capital cost is US$31.4 million at 16.00 ZAR/USD, compared to the 2019 feasibility study cost of $34.3 million at 14.01 ZAR/USD.

The company believes the project is commercially viable across a range of gold prices.

Benefits shown from the optimised study running at $1,500/ounce vs the 2019 feasibility study base case at $1,257/ounce include:

  • The IRR nearly doubling from 65% to 123%,
  • Mine life increasing from five years to more than 6.5 years,
  • EBITDA increasing by $50 million over the LoM to $150 million, and
  • NPV increasing by $35 million to $85 million.

In addition, the optimised study has shown an all-in sustaining cost (AISC) for the LoM of US$855/ounce and a reduced payback period from 14 down to eight months.

Next steps

As part of the approval process for a mining right in the region, an application for, and approval of, environmental authorisation is required.

This comprises a complete environmental management program report incorporating an environmental impact assessment (EIA) and environmental management program (EMP).

Guy said: “During this quarter, and while the team is restricted in movements due to the coronavirus lockdown, we will continue to progress the mining contract through to a final document with a preferred contractor, amend the EIA and resubmit it so we can readily implement the expanded mine schedule, progress discussion with five engineering firms tendering for the TGME gold plant construction.

“The board’s eye is firmly on the near-term development into gold production and in the medium term to grow the production profile as we develop and bring more mines on stream.

“We are building a sustainable business for long-term benefits for all shareholders and our local community. “

Trading halt

The company is now in a trading halt, pending an announcement in regard to a capital raising.

Securities will remain halted until the earlier of the start of normal ASX trading on Friday, April 24, 2020, or when an announcement is released to the market.

Quick facts: Theta Gold Mines Ltd

Price: 0.31 AUD

ASX:TGM
Market: ASX
Market Cap: $136.91 m
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