Middle Island Resources has determined it needs to conduct a mill upgrade at the Sandstone gold project in Western Australia otherwise the redevelopment of the site would not be viable.
The company plans to upgrade the plant to 750,000 tonnes a year following an evaluation on the existing limited plant throughput by the company and GR Engineering Services.
They will replace the existing circuits with a 1600 kilowatts rubber lined overflow ball mill and a nine-outlet cyclone distributor.
It will not only upgrade the Sandstone project’s throughput capacity but also allow Middle Island to treat higher grade ores.
“What the mill upgrade study suggests is that the (750,000 tonnes a year) upgrade, combining (Middle Island’s) open pit mineral resources with those of peer companies situated within trucking distance of Sandstone, is worth pursuing as the path to rendering otherwise uneconomic projects viable,” Middle Island managing director Rick Yeates said.
Middle Island flagged that the project would only generate marginal income given a gold price of $2500 an ounce.
This would put the project’s cash flow at around $4 million, which was considered unjustifiable as a stand-alone development without the upgrade.
Middle Island stated that it had been hit by the decrease in gold prices, exchange rate movements, rising costs in capital items, personnel, contract mining and fuel since mid-2020.
Yeates, however, said the doubling of the open pit mineral resources last year had delivered a considerable improvement in the potential economic return compared with the 2016 pre-feasibility study.
“Irrespective of a consolidation or improved market conditions, the company’s other open pit targets and underground deposits represent the opportunity for organic growth, as amply demonstrated by the success of last year’s feasibility drilling program, which delivered five new satellite deposits,” he said.
“Work on these opportunities is being considered.”