THE DRILL SERGEANT: Ausgold Limited (ASX: AUC) has completed a Scoping Study for the company’s 100 per cent-owned Katanning gold project in Western Australia.
Ausgold reported the Study had determined key outcomes highlighting the potential of the project to support a viable standalone gold mining and processing operation.
The Scoping Study incorporated a revised Mineral Resource Estimate of 33.9 million tonnes at 1.1 grams per tonne gold for 1.2 million ounces of gold.
The company said preliminary economics indicate the project has positive financial metrics over an initial mine life of seven years with capital payback early in the life of the project.
As a result of the positive outcome of the Scoping Study, the Ausgold Board has wasted little time in approving the commencement of further studies and metallurgical test work.
There is also to be a new drilling program charged with the aim of expanding the current Resource with a focus on targeting high-grade mineralisation within the Central Zone.
“The Scoping Study is a huge step forward for the Katanning gold project highlighting as it does the potential for a standalone mining operation,” Ausgold managing director Matthew Greentree said in the company’s announcement to the Australian Securities Exchange.
“The Scoping Study outlines a base case for a 1.25 million tonnes per annum mining operation capable of producing over 350,000 ounces over an initial seven-year mine life with an attractive payback period of less than two and half years.
“The Study has been completed to a high standard by an experienced team of independent Western Australian based consultants who have developed conservative operating parameters providing a high degree of confidence in study outcomes.
“This provides a realistic base case at an $2,000 per ounce gold price providing an attractive payback period of less than 2½ years, with these economics being significantly improved when current spot gold prices are considered.
“The project is located less than 300 kilometres from Perth and close to high-quality infrastructure which supports the near-term development of the project.
“The significant near Resource exploration potential, improves the economics of this project with a planned drill program to further enhance projects economics.
“The Scoping Study highlights the potential for the development of a robust standalone gold operation and, as a result, the Ausgold Board has approved the commencement of further studies, metallurgical test work and new drilling programs with the aim of expanding the current Resource with a focus on targeting high-grade mineralisation to expand the current Resource within the Central Zone.”