Gold explorer Star Minerals (ASX:SMS) has published a ‘positive’ Scoping Study for open-pit mining and third-party toll treatment for its Tumblegum South Project in Western Australia.
The company says the results of the study provide a basis for which to refine material inputs and enhance project economics for the Tumblegum South deposit.
With two active processing plants within a radius of 50km and 150km from Tumblegum South, Star Minerals says it considered multiple third-party processing options under a toll treatment agreement when crafting the Scoping Study.
At gold prices of between $2,250 and $3,000 per ounce, the Tumblegum South production target ranges from 116,000 tonnes @ 2.25 grams per tonne (g/t) gold, producing 7,600 ounces of gold, to 286,000 tonnes @ 2 g/t gold, producing 16,600 ounces of gold.
This production target generates an undiscounted accumulated cash surplus after repaying all working capital costs — but excluding pre-mining capital costs — of between $7.2 million and $16.3 million.
Under the Scoping Study, Star is contemplating mining as a single campaign over roughly 18 months, with pre-mining capital and start-up costs of between $700,000 and $1.5 million.
Essentially, the company says its Scoping Study suggests that the Tumblegum South project economics are ‘robust’ for a broad range of gold price scenarios.
Star Chairman Ian Stuart says the study has demonstrated the value and viability of the project.
“Star can now take the next steps to monetising this asset and more accurately assess various strategies to achieve this, including sale, partial sale, or joint venture of the project.
The Scoping Study also serves as basis for analysis by third parties wishing to evaluate the project as potential ore feed for existing processing operations.”
“Star can now take the next steps to monetising this asset and more accurately assess various strategies to achieve this, including sale, partial sale, or joint venture of the project”
Star Minerals assumes it will need around $3.4 million to achieve the range of outcomes outlined in the Scoping Study, including all pre-production costs.
Given the project’s ‘strong technical and economic fundamentals’ and the Star executive team’s ‘strong track record of raising equity funds’, the company says it believes it can source the necessary funding when required.
Star has appointed Caravel Securities as a corporate advisor concerning the funding of Tumblegum South.
According to its latest quarterly report, Star Minerals had $441,000 cash at hand as of 30 September, although the company completed a $600,000 share placement after the end of the quarter.
Write to Joshua Smith at Mining.com.au
Images: Star Minerals
