IMO your fully underground mining is many years away maybe even 10 years away as set out below. SPR have been clear that they will be mixing open pit ore with UG ore and it is an open question how long they will use the open pit ore but I believe it will be for at least 5 years. Using OP plus NN UG they could produce between 170 to 180k Oz pa with the OP lasting for 10 years (1.6mt pa processing) or 210k to 220k Oz pa with the OP lasting about 5.5 yrs. They could supplement the 2.5mt pa scenario by some Gilbey's UG and extent the mine life of OP by a few years to produce 250k Oz pa or even more but that would be a few years away given where they are with drilling out those deposits. I like them starting with the 1.6mt option producing 170k Oz to 180k Oz pa for a few years before ramping up to 2.5mt pa processing to produce 250k Oz or more pa.
Currently Gilbey's underground only has 253k oz in inferred and no indicated including 59k Oz from Sly Fox and Plymouth. The grade is only 1.69g/t. In other words they have heaps more drilling for well over a year to get a resource of sufficient size and grade to achieve a viable mining period of 5+ years at a grade of 3 g/t.
In contrast the Gilbey's OP resource is much larger at 487k Oz and mostly in the M&I category. The grade of 1.34% is about 65% higher than the past OP MRE of about 0.8% from GCY days. NN open pit adds another 93k Oz @ 2.27g/t of which is all M&I except for 6 k oz. Total is 579k Oz with 505k Oz in M&I at a grade of 1.48g/t (about 85% higher than the old GCY OP MRE grade of 0.8g/t) for 10.6 mt.
Two scenarios (using only M&I open pit resources):
- 1.6mt processing - NN at 600kt pa means 1mt pa from open cut for 44k Oz pa total about 150k Oz pa. However the grade for UG at NN is 6.9 g/t and 7.4 g/t for indicated. Based on the latest ET that grade should increase. So instead of 106k Oz pa NN should produce 124k Oz pa on average at a grade of 7 g/t or 133k Oz at 7.5g/t ie a total of close to 170k Oz pa to 180k Oz pa - This scenario means that the open pit would last about 10 years. They could reduce the NN processing to 500kt and still achieve production of 150k Oz pa.
- 2.5mt processing. - NN at 600kt pa and open pit at 1.9mt pa for about 85k Oz pa resulting in about 195k Oz pa or 210k to 220k Oz pa if NN grade is 7g/t or 7.5 g/t. Under this scenario the OP would last about 5 to 5.5 years.
Both options are sound to start production. SPR need to do a lot more drilling at Gilbey's and SF to understand how large the resources maybe. Then there are other possible deposits which may extent the OP scenario mine life.
BTW at 600kt pa at around 1,700 or 2,000 OPVM they would only be digging 60m to 70m pa from a deposit that probably goes down at least 1,000m - ie excluding OC resources that gives a mine live of at least 10 years for NN and if it goes to 2,000m deep than maybe a 25 year mine life.. And then there are UG resources at other deposits.
If NN ends up with an MRE as stated in the ET target with 85% in indicated status (they are aiming for that) the indicated resource will be between 1.35m to 1.6m Oz to which can be added another 420k Oz from Gilbey's or a total of between 1.75m Oz and 2 m Oz (note BGL only has 1.34m Oz in indicated). And there will be further indicated resources from Gilbey's.
We are looking at a mine life of at least 10 years at an annual production of 200k Oz and potentially many decades as they drill out the various deposits. The SPR story has only started.
