WA Gold (ASX:WAU) expects low risk and high rewards from staged mining at its Abercromby Gold Project in Western Australia.
The first stage is predicted to generate a total net cash flow of between $243 million and $297 million. This stage is expected to have a net present value of between $205 million and $253 million before tax.
The company estimates a 33-fold return on pre-production investment in light of gold spot prices being $700 higher than the previously studied price of $6,000 an ounce.
Only $8 million will be required for pre-production start-up capital. WA Gold believes this represents a “significant value proposition”.
The project will initially target producing about 114,000 ounces of gold, with about 90% classified as indicated resources under the Joint Ore Reserves Committee (JORC) Code.
There is also potential to further convert 518,000oz of JORC mineral resource into future mine inventory.
“These scoping results highlight the value and viability of Abercromby as a new mine … and, together with buoyant gold prices, confirms a compelling opportunity,” WA Gold CEO Ben Pollard says.
“We considered a range of mining scenarios at Abercromby, with the preferred option being a staged development that initially focuses on mining high-confidence resources — the stage one mine … [and] WA Gold will continue to expedite resource development drilling whilst advancing Prefeasibility Study work with our beefed-up technical and management team.”
WA Gold is an emerging gold production and exploration company with assets mainly in the Golden State.
Write to Richard Szabo at Mining.com.au
Images: WA Gold
