Calidus Resources is set to ride on high gold prices and solid economics at the Warrawoona project in Western Australia, propelling it towards starting construction of the mine next year.
An updated pre-feasibility study (PFS) for Warrawoona confirms an average production of 85,000 ounces a year over the first six years, according to Calidus.
This includes 90,000 ounces in the first year of production at an all-in sustaining cost (AISC) of $1251 an ounce.
The PFS also highlights a 24 per cent increase in Warrawoona reserves to 519,000 ounces, with 502,000 ounces of these coming from the main Klondyke mining area.
Calidus is now preparing tenders for all major contracts to lock in a pathway for the proposed mine development next year.
The company will keep underground production on hold until the third year, which will be de-risked via a diamond drill drive ahead of execution.
“The updated pre-feasibility highlights the superb cash generating potential of the Warrawoona gold project and reinforces why we are accelerating the development timeline of the project to take advantage of the current gold price environment,” Calidus managing director Dave Reeves said.
“Risk minimisation is a fundamental theme of all work at Calidus. As such, we have altered the resource modelling technique to a more conservative method, we have delayed the underground to allow the company to focus on a single open pit operation initially and we are including a more flexible comminution circuit.
“The decisions being made ahead of development mean that targets laid out for the operating project have maximum probability of being met or exceeded.”
The Warrawoona project will involve a pre-production cost of $116 million, but this expense is set to be returned after just 13 months.
Based on the minable inventory, Calidus is slated to produce 623,000 ounces over Warrawoona’s eight-year mine life.
The project’s definitive feasibility study (DFS) is on track for completion in the September quarter, ahead of early works commencement in the following quarter.
Calidus only expects changes relating to costs and fine tuning of mining schedules at the DFS level.
“With the recent addition of some very exciting regional exploration prospects and now the confirmation of the cash generating potential of Warrawoona, the company is poised to enter a period of significant and rewarding growth,” Reeves concluded.