Bullabulling JV completes Scoping Study

THE BOURSE WHISPERER: The Bullabulling Joint Venture (Auzex Resources and GGG Resources) has completed an initial Scoping Study at the Bullabulling gold project.

According to JV partner Auzex Resources the aim of the Scoping Study was to examine the potential economic and technical viability of a large tonnage – low grade open cut mining operation at Bullabulling.

The company said the six kilometres long Bullabulling Trend, running between the Bacchus and Bonecrusher pits, was the focus of the study and where resource drilling and assessment programs to date have been concentrated.

The Scoping Study base case has indicated to the JV a large scale open pit mining and carbon-in-leach operation producing 7.5 million tonnes per year of ore with a run of mine grade of 1.04 grams per tonne gold, could potentially generate approximately 2.1 million ounces of gold at a cash cost of $968 per ounce.


Bullabulling Mineral Resource (3rd August 2011) at a 0.5 g/t cutoff

“The results of the Scoping Study are exciting and positive for the Bullabulling gold project,” Auzex Resources managing director John Lawton said in the company’s announcement to the Australian Securities Exchange.

“As would be expected from a high tonnage – low grade project, the economics are particularly sensitive to recovered grade and operating costs, and we are of the view that with further studies the project will see improvements in these areas from the current estimates which will impact positively on the overall economics and cash costs in particular.

“The pre-feasibility study is now well in hand and will be based on an upgraded resource, which will form the basis of the maiden reserve, due to be finalised during the first quarter of 2012.”

The Auzex release said the main results from the study indicate that:

–    The project has sufficient resources to establish an operation with a minimum 10 year mine life target;

–    The metallurgy has no issues and recoveries for the operation should range from 92.5 per cent to 94.0 per cent;

–    Annual production should average around 230,000 ounces over the 10 year period with a life of mine production of 2.1 million ounces;

–    Operating costs of approximately $30 per tonne of ore treated, with potential for significant improvements;

–    Capital costs of approximately $366 million, again with potential for improvement;

–    Using a 6 per centdiscount rate and gold price of A$1,500 per ounce, the NPV is $389 million with an IRR of 29 per cent (at A$1,700oz the NPV is A$703M with an IRR of 42 per cent);

–    There are no apparent environmental or social issues to developing the project; and

–    Current infrastructure including water bores, haul roads and pit voids are in good condition and can be used for the proposed operation.

Auzex said the JV is progressing with a pre-feasibility study, which it expects to complete by the third quarter of 2012.

The new study is being based on a new resource model that will be upgraded to include the current infill drilling results from the current program of approximately 70,000m.

This will allow the establishment of a maiden reserve for the project.