Western Gold Resources (ASX:WGR) is shifting its focus into the next phase of development at the Duke Gold Project in Western Australia, after updating the outcomes of a Scoping Study for open-pit mining and toll treatment.
The company intends to focus on beginning grade control and infill drilling to evaluate resource confidence and advance towards production readiness.
The revised Scoping Study production target delivered an estimated undiscounted cash surplus of $56.1 million at $4,500 per ounce gold price – representing a 47% increase on the previous estimate of $38.1 million.
At a $5,500 per ounce gold price, the surplus increases to $97.3 million.
Using the increased gold price of $4,500 per ounce, the production target for the project is estimated to be 686,000 tonnes @ 2.1 grams per tonne, producing 42,800 ounces of gold. The revised production delivers a 53% increase in tonnes and a 26% increase in gold ounces, supporting enhanced project economics.
Pre-mining capital and start-up costs are estimated to be $2.6 million to $2.8 million, with a 14-month mine life.
Managing Director Cullum Winn says the company’s preferred mining construct SSH Mining (ASX:SSH) has provided a deferred payment facility to fund production in a non-dilutive manner.
“There are very few near-term development gold projects in Western Australia that offer such a compelling combination of rapid payback, low capital intensity, and robust financial returns and is further reinforced with results suggesting that project economics are robust for a broad range of gold prices, with positive outcomes returned above a gold price of $3,081 per ounce,” Winn says.
Western Gold, which has a market capitalisation of $36.8 million, has also finalised a binding toll milling agreement with Wiluna Mining’s (ASX:WMC) processing plant.
Winn notes with a secure and nearby processing solution in place, the Scoping Study confirms that the mining, haulage, and processing costs are all within the bounds of tendered and agreed pricing.
The Gold Duke Project, located 35km southwest of Wiluna within the Joyners Find Greenstone Belt, has existing mining approvals at the Eagle, Emu, Golden Monarch, and Gold King deposits.
Write to Aaliyah Rogan at Mining.com.au
Images: Western Gold Resources
