THE BOURSE WHISPERER: Mungana Goldmines has completed a scoping study on the Tunkillia gold project, located in the Gawler Craton of South Australia.
Mungana holds a 55 per cent majority interest in the project, which has a JORC-compliant resource of 15.6 million tonnes at 1.6 grams per tonne gold for 803,000 ounces of gold to a depth of 300m.
Location of the Tunkillia project in South Australia. Source: Company announcement
According to the company the scoping study found the Tunkillia gold project to be a robust medium-scale project that will be capable of producing strong financial returns.
Mungana undertook the study to determine preferred mining and processing options for the project.
The study produced a pre-tax operating surplus of between $115 and $210 million and a Pre-Tax IRR of between 20.9 per cent and 35.4 per cent at gold prices ranging from $1,500 to $1,700 an ounce of gold.
The company said these figures combined with average cash costs of $983 per ounce demonstrated Tunkillia to be a solid gold project at current gold prices.
The company said the study had justified its confidence to progress a bankable feasibility study at the project.
“The study provided a strong result based on mining the current JORC-compliant resource and there is potential to improve project economics by increasing the size of the resource via a $3 million regional drilling program scheduled to commence in May,” Mungana Goldmines managing director Pat Scott said in the company’s announcement to the Australian Securities Exchange.
“Based on the current exploration campaign, Mungana will increase its ‘earn in’ position at Tunkillia to 65 per cent by December 2012, taking the company’s attributable resources to 3.2 million ounces.”
Mungana is now proposing to commence construction in early 2014 to enable the production and processing of ore to commence by early 2015, subject to the timing of relevant project approvals.
Scott said the free cash flow generated from the Tunkillia project would substantially off-set capital costs at the company’s Mungana gold project in North Queensland and increases its total production forecast to 180,000 ounces of gold per annum by 2015 to 2016.
“The completion of the Tunkillia gold project scoping study represented a further milestone in Mungana’s strategy to position the company as a mid-tier gold producer over the next three years,” Scott said.