Kalamazoo Resources (ASX:KZR) has identified 524,000 ounces of gold to be recoverable from the Mt Olympus Deposit within the Ashburton Gold Project in the Pilbara region of Western Australia, on the return of a Scoping Study.
The Scoping Study shows the project to have pre-production capital expenditure of about $208 million forecast to be repaid in 23 months.
Under a $4,500 per ounce base case, the Scoping Study shows Ashburton will produce pre-tax cash flow of $747 million, have pre-tax NPV8% of $423 million, and pre-tax IRR of 47%. Payback will be 1.9 years following process plant commissioning.
Under a $5,250 per ounce scenario, the project is expected to generate $1.071 billion in pre-tax cash flow, have NPV8% of $633 million, IRR of 61%, and payback of 1.4 years.
The company has marked recoverables to be held at an all-in-sustaining cost of US$2,183 ($3,363) per ounce over a 73-month mine life.
Kalamazoo has elected a 1.5 million tonnes per annum flotation circuit to produce gold concentrate grading at 25 grams per tonne at an 86% processing recovery, as the most optimal step forward.
Kalamazoo expects to reach a peak production of 110,000 ounces of gold in year five, averaging 73,000 ounces over seven years.
Executive Chairman Luke Reinehr says the return of the study highlights the greater project’s potential to become an “outstanding high-margin, cashflow-generating gold operation in the world-class Western Australia mining jurisdiction”.
“This study has successfully established a low-cost pathway to production through the sale of a high-grade gold concentrate,” Reinehr says.
“Gold-in-concentrate production is a proven, capital-efficient route to market, and preliminary discussions indicate the potential for keen demand for Ashburton’s high grade gold concentrate.
“Our immediate focus is to maximise conversion of the 17% of inferred mineral resources within the Mt Olympus open pit to the indicated mineral resource category, while advancing the underground opportunity into a JORC-compliant resource mineral resource, and alongside the existing 363,000 ounces mineral resources at Peake, Zeus, and Waugh.”
This Scoping Study has investigated mining and processing options for the sulphide gold mineralisation contained within the Mt Olympus optimised open pit resource. It is proposed that the mine will be located on an existing mining lease across a brownfields site, utilising established infrastructure wherever possible.
The production target from the Mt Olympus open pit is approximately 8.54Mt @ 2.2g/t gold mined ore, equating to about 609,000oz of contained gold.
Kalamazoo now intends to begin Prefeasibility Study work at Ashburton, after engaging Entech, BHM Process Consultants, NewPro Consulting & Engineering Services, and Green Values Australia to conduct the study.
Trading Economics reports the price of gold to sit at US$3,936 per ounce, on the tail of a 49.82% increase for this year to date.
Write to Maddison Elliott at Mining.com.au
Images: Kalamazoo Resources
