Based on the information provided in the announcement, here's an analysis of potential free cash flow using toll treating:
Revenue Calculation
- Total resource: 14,900 oz @ 6.8 g/t Au
- Gold price: AUD$5,100/oz
- Gross revenue: 14,900 oz × AUD$5,100/oz = AUD$75.99 million
Key Cost Components
1. Mining Costs:
- Small-scale open pit mining for near-surface transition material: ~AUD$40-60/tonne
- Underground mining for fresh material: ~AUD$120-180/tonne
2. Toll Treatment Costs:
- Processing costs: ~AUD$35-50/tonne
- Transport costs to nearby mill: ~AUD$15-25/tonne
- Recovery loss (assuming 90-95% recovery): 5-10% of contained gold
3. Royalties:
- WA state royalty (2.5%): ~AUD$1.90 million
- 1% NSR mentioned in the document: ~AUD$0.76 million
Estimated Cash Flow Calculation
For the total resource (68,400 tonnes):
- Mining costs: ~AUD$8.2-12.3 million (average ~AUD$150/tonne for the predominant fresh material)
- Toll treatment + transport: ~AUD$3.4-5.1 million (~AUD$50-75/tonne)
- Metallurgical recovery (assuming 92%): ~14,900 × 0.92 = ~13,708 oz
- Recovered gold value: ~AUD$69.91 million
- Royalties: ~AUD$2.66 million
- Additional overheads, site costs and administration: ~AUD$2-3 million
Estimated Free Cash Flow:AUD$69.91M - AUD$8.2-12.3M - AUD$3.4-5.1M - AUD$2.66M - AUD$2-3M = AUD$46.85-54.65 million
Key Considerations:
- High-grade nature (6.8 g/t Au) provides robust economics for toll treating
- The deposit's near-surface characteristics would allow for lower initial mining costs
- The resource contains primarily fresh material (66,500 tonnes of 68,400 total tonnes)
- Small resource size makes toll treating more economical than building a standalone plant
- The potential for resource expansion could improve project economics
This analysis suggests a strong potential free cash flow of approximately AUD$47-55 million before tax, or about AUD$3,150-3,670 per ounce of gold recovered. However, actual results would depend on final metallurgical recoveries, contract terms with the toll treatment facility, and the mining method selected.
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