Millennium Minerals will raise around $15 million to develop a second underground mine and to ramp-up exploration at the Nullagine gold project in the Pilbara.
The gold producer will build the $10 million high-grade mine at the Golden Gate mining centre, which hosts some of the highest-grade deposits identified at Nullagine to date.
The development is aimed to maintain “the high level of exploration momentum” across the project. It will join the Golden Gate open pit mining centre and five other production centres at Nullagine.
Millennium expects to increase its production guidance from 90,000–100,000 ounces at an all-in cost of $1300–$1375 per ounce in 2019, to 110,000–120,000 ounces at $1200 per ounce cost in 2020.
A sum of $4 million will also be allocated to significantly ramp-up exploration and increase the average head grade at Nullagine.
Millennium stated in an ASX announcement that for the first time in 2019, its exploration campaign will focus on both high-grade oxide and sulphide targets, with commissioning of the stage one upgrade to the Nullagine processing plant to accommodate sulphide ore in April this year.
The expansion will allow Millennium to maintain 100,000 ounces per year production rate for at least five years with lower costs.
Millennium chief executive Peter Cash said, “We are now on the cusp of another important transition at Nullagine, where we have the opportunity to mine and process much higher-grade ore sources with the potential to further significantly increase our average head grade and reduce operating costs – all against the backdrop of a very favourable Australian Dollar gold price environment.
“Many high-grade sulphide targets at Nullagine have been ignored in the past due to the lack of a processing solution, with numerous high-quality targets set to be tested over the remainder of the year.
“Our aim is to increase our reserve base from the current 375,300 ounces to more than 500,000 ounces by the end of the year to deliver our targeted over-five-year mine life.”
Millennium’s recent metallurgical results have also confirmed outstanding gold recoveries for sulphide ore, delivering more than 80 per cent from pyrite-dominant ore and around 70 per cent from arsenopyrite-dominant ore.
The company will allocate the remaining $1 million from the capital raising for costs of rights issue and general working capital.
It will issue fully-underwritten rights at 16.5 cents per share, a 17.5 per cent discount to the February 20 closing price.