Western Australian junior Doray Minerals has this week officially evolved from an explorer to a producer, completing its first gold pour.
Located outside of Meekatharra, the company’s Andy Well gold project delivered its first 144 ounce bar.
Doray’s managing director Allan Kelly spoke to Australian Mining at Diggers and Dealers, saying the first gold pour was the culmination of three-and-a-half years of exploration, approvals, and development.
The company kicked off mining activities in November last year, starting with a small open pit operation which allowed for the development of an underground mine in May.
During construction employment peaked at about 150 workers, Kelly said that number has now dropped back to about 130 people as Doray continues to forge ahead with production.
Kelly explained because Andy Well was a greenfield project the company undertook Native Title negotiations with the local indigenous people.
“A lot of gold projects in Western Australia are recycled assets from the 80s and 90s, so they’re already on granted mining leases, which were granted prior to native coming in so they don’t have to go through that process, we had to do everything from scratch,” he said.
Launching into production just as the gold price moves south, Kelly said with a resource sitting at about the 15 grams per tonne mark it is relatively high grade, low cost operation.
“We’re looking at cash operating costs in the $600s (per ounce) and the total operating costs in the $900s [per ounce],” Kelly said.
“Our work to date suggests that Andy Well will be a low cost operation and we expect it to fall within the lowest quartile of Australian gold projects in regards to cash operating costs per ounce.
“Even at the current gold price there’s still a good margin there.”
Last year Doray managed to secure $55 million in debt funding from the Commonwealth Bank for project infrastructure development and raised an additional $43 million in equity to cover mining and operational costs.
He said if the company attempted to raise funding now it would’ve been “very difficult, probably impossible, our timing was good”.
Doray has also locked in about half of its gold production or 45,000 ounces for the first 15 months at $1620 an ounce.
“We knew we would potentially need a lot of debt for the project so we decided to put some hedging in place as insurance against the project,” he said.