Dacian Gold expects the Mt Morgans gold project in Western Australia to enter production in 2018 at a development cost of $220 million.
The Perth-based company this week released a feasibility study for the project, which outlined initial ore reserves of 18.6 million tonnes at two grams per tonne for 1.2 million ounces. Dacian forecasts an initial eight-year mine life with annual output of 186,000 ounces for the first four years.
To construct the mine, which will comprise an open pit and two underground operations at the Westralia mine area, the cost has been estimated at $172 million for infrastructure and $48 million for mine development.
The company said it intends to fund the development of the project through a combination of equity and project debt.
It is expected that Mt Morgans will pay for itself within 21 months of production, based on a $1600 an ounce gold price at all-in sustainable costs of $1039 an ounce.
Meanwhile, Dacian has also released a pre-feasibility study for a proposed expansion of the Westralia mine, which it said has the potential to increase the project’s ore reserve to 21.4 million tonnes at 2.4 grams per tonne of gold for 1.7 million ounces.
According to Dacian, the study found that an additional $3 million capital spend on the project could lift its mine life to nine years, with production of 197,000 ounces per year for the first seven years.
Dacian executive chairman Rohan Williams said the studies showed that Mt Morgans would be a high-quality gold project with significant production scale and low costs.
“There are also abundant growth opportunities, with the new expansion pre-feasibility study demonstrating the potential to increase production while potentially reducing the all-in sustaining cost to around $970 an ounce over a nine-year period,” Williams said.