COMMODITY CAPERS: In 2020, Rio Tinto infamously destroyed the Juukan Gorge in Western Australia, the reverberation from which continues to cause wobbles in the corridors of permitting power.

This was on show last week when the Federal Minister for the Environment, Hon Tanya Plibersek MP, put the kybosh on Regis Resources’ (ASX: RRL) McPhillamys gold project in New South Wales by partially upholding a Section 10 Objection under the Aboriginal and Torres Strait Islander Heritage Protection Act 1984.

We can’t pretend to know what discussion transpired when the document landed on Minister Plibersek’s desk, but let’s assume the spectre of past mining infractions (Rio, we’re looking at you) when it comes to sacred Aboriginal sites started rattling the office furniture.

Would signing off on the decision be a Sir Humphrey Appleby moment of political bravery, or would telling the company to rethink its proposal be a more prudent, Jim Thacker moment of pragmatism?

“I have decided to make a partial declaration under section 10 of the ATSIHP Act to protect a significant Aboriginal heritage site near Blayney, in central west New South Wales, from being destroyed to build a tailings dam for a gold mine,” Minister Plibersek said in her media release.

“The Wiradjuri/Wiradyuri people, who traditionally lived around the Bathurst area, have significant spiritual and cultural connections to the headwaters of the Belubula River.

“Because I accept that the headwaters of the Belubula River are of particular significance to the Wiradjuri/Wiradyuri people in accordance with their tradition, I have decided to protect them.

“Crucially, my decision is not to stop the mine.”

To say Regis Resources was bullish about the opportunity offered by the McPhillamys gold project would be an understatement with the company releasing a Definitive Feasibility Study (DFS) in July that demonstrated the project as being, “a value accretive, long-life, low operating cost, organic growth opportunity with robust financial metrics, located in the Central Tablelands of New South Wales”.

With the gold price currently on a very satisfying trajectory, the DFS delivered a scenario yielding peak annual production of 235,000 ounces of gold and average annual gold production of 187,000 ounces when at steady state production rates through years one to nine.

The process plant would treat approx. seven million tonnes per annum to recover a total of 1.71 million ounces of gold over 9.4 years of processing.

All In Sustaining Costs (ASIC) for the life of mine was estimated at $1,580 per ounce generating total EBITDA of $2.8 billion and pre-tax cash flow of $1.5 billion.

Who wouldn’t be excited by that? And who wouldn’t anticipate such a project, providing tax dollars to the government coffers and lots and lots of employment, to get a tick of approval using the Minister’s thickest Texta?

In its response Regis noted Minister Plibersek stated her decision “will not stop the mine”.

“To the contrary”, the company said, “this decision does impact a critical area of the Project development site and means the Project is not viable”.

Regis acknowledged that, “while a number of alternatives were considered early in the design process, the Project does not have any currently viable alternative infrastructure locations”.

The decision potentially throws a whole new shape to studies undertaken by companies in the future as where a company may or may not put a tailings dam might no longer be a definitive aspect of a DFS.

A DFS is, by name, definitive. Meaning there is not any wriggle room when a spanner is thrown amongst the pigeons.

Should a DFS then, be so black and white?

If it means a company is sent back to the drawing board, meaning more time and money to be spent on a reconfiguration shouldn’t there already be a Plan B scenario in place?

A DFS is an expensive exercise. This one was the culmination of years of works plus several truckloads of cash, which means to revisit and revise will involve spending more time and investment dollars that are presently thin on the ground even with the skyrocketing gold price.

We don’t pretend to fully understand the repercussions involved, we are after all a journalist, not an engineer, although there is any number of journos out there purporting to have all the answers.

We simply ask the question. Does a DFS have to be so definitive, or could there be more scope for alternatives, especially given the wavering concern of those signing off on such ventures regarding possible damage to indigenous cultural sensitivities?

In her media release, Plibersek revealed Regis had indicated had, “assessed around four sites and 30 potential options for the tailings dam”.

“Protecting cultural heritage and development are not mutually exclusive,” she said.

“We can have both.”

Regis accepted this, however, responded to say that although, “there were multiple locations and potential options for the TSF (tailings storage facility) that were assessed, Regis notes that these were not currently viable options for the Project.

“To advance an alternative TSF solution will require further extensive investigations and studies along with the restart of the state and federal approvals process, which could take between five and ten years, ultimately with no certainty of a viable alternative being realised.”

The Association of Mining and Exploration Companies (AMEC) declared the Minister’s decision would make the $1 billion McPhillamy’s gold project unviable in its current form.

“The $1 billion investment to build the mine, the 580 construction jobs, the 290 operational jobs, and $200 million dollars of royalties to the State, as well as real benefits for local Traditional Owners, just went up in smoke,” AMEC CEO Warren Pearce said.

“This is an incredibly disappointing decision that lacks reason and common sense, and sets a truly terrible precedent for investment risk in Australia.”

AMEC conceded that Regis would now need to consider a possible new pathway for the eventual development of the project, however, if this were possible, it will now require an all-new State and Federal approvals process adding years to any completion date.

“If any project, no matter how thoroughly consulted, negotiated, supported and assessed, can be knocked over by the objections of only a few people at the end of the process, then how can any company or investor have confidence to invest in Australia,” Pearce continued.

“The absolute absurdity of this this decision, is that in upholding the Section 10 Objection the Minister has chosen to ignore the views of the recognised Traditional Owners for this country (the Orange Local Aboriginal Corporation), who did not object to the Project.

“They could see the value and future prosperity that this project could bring to their people. It’s a shame the Minister didn’t listen to them, while purporting to protect their interests.

“Instead, the Minister has chosen to prioritise the views of a small number of persons, who are not the local lands council.”

McPhillamys still has the potential to be a multi-billion dollar project that could deliver positive outcomes.

The NSW state government would welcome the projected approx. $200 million in royalties with the Federal government enjoying a healthy boost to the Australian economy.

Add in the projected 580 full-time jobs in construction and around 290 full time jobs when in production, McPhillamys stands out as a project of some significance.

It will cost more for companies to have a Plan B up their sleeve, but with the uncertainty surrounding who ticks off what and why they may not, surely a DFS needs to be a bit more Flexible.

We wait with bated breath to see which up and coming project will be the first to release a completed FDFS?