Calidus Resources Poised for Pilbara Gold Production

THE CONFERENCE CALLER: Those looking to quell any doubts regarding the potential of Western Australia’s Pilbara region as a future major gold producing hub should look no further than the example being set by Calidus Resources (ASX: CAI) at its emerging Warrawoona project. By Mark Fraser

While a lot of the oxygen in the small end of town gold space is currently being sucked up by the success of WA-based explorer De Grey Mining (ASX: DEG), Calidus has diligently been working its way towards becoming a producer by the first half of 2022.

The company is currently on the path to establishing a $120 million operation with an average production of 90,000 ounces per annum at a life-of-mine all-in sustainable cost of $1,290 per ounce over an initial eight year (and three month) life.

During this time Calidus is planning to mine 17.6 million tonnes grading 1.24 grams per tonne for 702,000oz (with the recovered gold content being 658,277oz).

Meanwhile, the scheduled ore processing rate is 2.4Mtpa (oxides) and 2Mtpa (fresh material) with the average life-of-mine recovery being 94.4%.

The key feasibility outputs, at a gold price of $2,500 per ounce, include an EBITDA of $110 million a year, a post-tax project free cashflow of $447 million, a post IRR of 69%, a post-tax NPV of $286 million and a payback period of 13 months.

Warrawoona currently has ore reserves of 14.3Mt grading 1.2 grams per tonne for 547,000oz, while the company’s total resource inventory sits at 43.7Mt grading 1.06 grams per tonne for 1.5 million oz.

During the 20th RIU Explorers Conference in Fremantle, Calidus managing director Dave Reeves said later this quarter the company planned to release an integration study on the Blue Spec deposit – a super high grade resource containing 219,000oz grading 16.3 grams per tonne – with the intention of bringing it into the current mine plan and increasing production “significantly on an annual basis”.

Located about 70km to the south-south east of Warrawoona, Blue Spec covers a strike length of 8km and remains open down-dip and along strike.

Made up of two ore bodies that is separated along strike by 1km, Blue Spec was mined in the 1970s.

“It is an ore body that requires flotation – we will have a little flotation circuit to the side of Warrawoona, so we will produce gravity gold, a flotation concentrate, and we will then also put the tails through the CIL,” Reeves explained.

“So, we will get about 20-25 per cent of the gold through the Warrawoona gold plant and 75 per cent through concentrate sales – (there is) a very simple circuit in that and one we see as very low risk.

“The scoping study will be out this quarter, the DFS (will be) out around the first gold pour so that when things settle down at Warrawoona we can press the button on this and bring it in as quickly as we can, because you don’t often get 16 gram ore bodies – in fact I think it is the first one I have been involved with, so it has been an absolute pleasure.”

Main construction is set to begin this quarter. Early site works – including the installation of an accommodation village, water bores, communications and access roads – have been completed.

Reeves said he “couldn’t agree more” that the Pilbara was the place to be for an emerging gold producer.

“If you have a look, yesterday Novo (Resources – TSX: NVO) poured their first bar of gold from their Beatons Creek operation at Nullagine to the south east of us, Capricorn (Metals – ASX: CMM) will be pouring gold to the south of Newman later this year, we will be pouring gold early next year, so it is certainly an epicentre of gold development in WA,” he said.

“De Grey is obviously out there kicking goals, and there are a lot of other deposits as well.”

“So it’s a fantastic place to be from the gold perspective.”