Regis Resources (ASX:RRL) reports a cost blowout as it progressing towards completing a Definitive Feasibility Study (DFS) at its McPhillamys Gold Project in New South Wales albeit.
As the DFS progresses, the company says previously indicated development costs will be higher than anticipated.
Regis, which has a market capitalisation of $1.52 billion, reports the total construction costs estimation ranges between $845 million and $900 million, while pre-production costs range between $115 million and $155 million.
Regis notes that resource market analysts have a range of capital development estimates between $550 million to $650 million. The company says these increases reflect not only the global industry-wide inflationary environment and the passage of time but also, amongst other factors, the project development requirements emanating from the results of the NSW planning approvals process.
The finalisation of pre-production costs is still in progress, as the company is assessing the cost/benefit tradeoff between the alternatives around early mill feed quality options and the associated mining expenditure in the initial ramp up phase.
Meanwhile, the life of mine operations average all in sustaining costs (AISC) of $1,600 to $1,800 per ounce. This is based on 61 million tonnes of ore at 1g/t and an average mining rate for the first 6 years at 36 million tonnes per annum of ore and waste.
Managing Director Jim Beyer says the general cost inflation seen globally for construction and permitting required scope increases have clearly escalated costs for McPhillamys.
“We are taking the necessary time to reduce, as far as we can, the capital required to bring McPhillamys into production through value engineering optimisation.
McPhillamys is a key part of Regis’ future growth and remains an attractive gold project that, at current gold prices and under our current AISC assumptions, delivers strong margins with clear upside potential via this rising gold price environment and with mine-life extension opportunities that go well beyond the current plans.”
The McPhillamys project is considered a ‘large’ undeveloped open-pittable gold resource that lies 250km west of Sydney, Australia.
Regis Resources is a gold-focused explorer that operates within 2 distinct project areas in the Northeastern Goldfields of Western Australia and in the central western region of New South Wales.
Write to Aaliyah Rogan at Mining.com.au
Images: Regis Resources
