Gold developer Magnetic Resources (ASX:MAU) has published a Prefeasibility Study (PFS) for its Lady Julie Project in Western Australia, highlighting a ‘financially robust’ project with a 9-year mine life.
Over the life of the project, Magnetic is expecting to produce 720,000 ounces of gold, averaging 87,000 ounces per year, according to the new PFS.
With a pre-tax internal rate of return (IRR) of 85% at a gold price of $2,800 per ounce and increasing to 108% at current spot prices of $3,100 per ounce, Magnetic is forecasting total earnings before interest, tax, depreciation, and amortisation (EBITDA) from Lady Julie of between $982 million and $1.191 billion, depending on gold prices.
Magnetic says it has reasonable grounds to believe it could finance the project through a combination of debt and equity, with roughly $93.4 million in development capital required for the project to reach production.
However, the company has yet to launch any formal discussions with potential financiers. When the time comes, Magnetic will explore funding sources including banks, credit funds, export credit agencies, government agencies, and product sales and offtake agreements.
The company says it will also consider commencing a formal strategic partnership process for alternative funding options.
According to Magnetic Managing Director George Sakalidis, the ‘excellent’ PFS outcome showcases Lady July as one of the ‘highest-margin’ undeveloped gold projects in Australia.
“The project’s low-cost profile and strong financial return metrics are primarily driven by the extraordinary near-surface, high-grade nature of the Lady Julie Central and Lady Julie North 4 deposits. This low-cost profile places the project in the bottom half of the cost curve of gold producers in Australia.
The PFS focuses on mining the indicated and inferred resources of Lady Julie North 4, Lady Julie Central, and Hawks Nest 9. Lady Julie North 4 is by far the largest contributor to the study, producing over 11.5Mt of ore during its operation”
Sakalidis says over the rest of 2024, Magnetic will work to further refine the project’s economics by boosting process recoveries and modifying processing scenarios.
Further, he says there is potential to further increase production and mine life estimates for Lady Julie from the inclusion of resources drilled since the company’s last update in November 2023.
With the completion of the PFS, Magnetic Resources will now look to prepare and submit a mining proposal to advance further lease applications and regulatory approvals to allow for mining.
Images: Magnetic Resources
