Technical analysis, page-364

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Experience in Heap Leach Gold Production

The expertise in heap leach operations primarily comes from Brendan James, a hydrometallurgical engineer and principal of BIM Metals, who is overseeing the project. James has over 25 years of experience in designing, constructing, operating, and optimizing heap leach mining operations across Australia, including projects in Queensland, South Australia, and Western Australia. A notable example is his successful management of the White Dam heap leach gold operation in South Australia, which highlights his capability to deliver on similar projects. His experience is cited as a key factor in de-risking the Mulgabbie North project for OzAurum shareholders. LINE Hydrogen itself, while primarily focused on green hydrogen production, brings its renewable energy expertise to the partnership, aiming to power the operation with green hydrogen to achieve net-zero emissions gold production. The collaboration with BIM Metals ensures the technical heap leach expertise, while LINE Hydrogen’s role as the sole green hydrogen provider supports the project’s sustainability goals.

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Thank you for providing the January 2025 update on the Mulgabbie North Gold Project heap leach feasibility study, which complements the previously discussed April 24, 2025, quarterly report and other updates. This January update, attributed to LINE Hydrogen Pty Ltd, outlines progress on the feasibility study, including mine design, permitting, geotechnical drilling, and environmental surveys, with a focus on a trial mining and heap leach operation. The confirmation that the water abstraction license application, lodged in January 2025, was granted by April 2025 (for 450,000 kL, as per the April quarterly report) provides a clear indicator of permitting efficiency. Below, I’ll analyze what this update, combined with the rapid water license approval, indicates about the speed and efficiency of other pending permits and the overall progress of the Mulgabbie North Gold Project, addressing your query in the context of the project’s timeline, risks, and operational advancements.

Summary of the January 2025 Update

The January 2025 update highlights the following key developments in the Mulgabbie North heap leach feasibility study, fully funded by LINE Hydrogen and BIM Metals (LHBM) under the 50:50 profit-sharing agreement with OzAurum Resources Ltd (ASX:OZM):

• Mine Design and Site Layout: Designs for a trial open pit and heap leach operation are progressing, with the trial intended to be cash-positive and to inform the final feasibility study (due by September 2025). The trial’s small scale allows for a simplified and expedited permitting process.
• Water Abstraction License: An application was lodged with the Department of Water and Environmental Regulation (DWER) for water requirements to support the trial heap leach operation. By April 2025, this was granted for 450,000 kL, confirming water availability.
• Geotechnical Drilling: Diamond drilling commenced to provide data for the geotechnical study, critical for trial open pit mine design. By April 2025, one diamond drill hole was completed.
• Heritage Survey: Completed over the feasibility study tenure, ensuring compliance with cultural heritage requirements under the Aboriginal Heritage Act 1972.
• Flora and Fauna Survey: Fieldwork was completed, with the final report expected within weeks of January 2025, addressing environmental permitting requirements.

These updates align with the April 2025 quarterly report, which noted near-complete trial pit and heap leach designs, additional metallurgical drilling (one diamond and one RC hole), and the granted water license, reinforcing steady progress toward trial production.

Speed and Efficiency of the Water License

The water abstraction license’s timeline is a critical benchmark:

• Lodged: January 2025 (as per the January update).
• Granted: April 2025, with a 450,000 kL allocation confirmed in the April 24, 2025, quarterly report.
• Processing Time: Approximately 3–4 months.

In Western Australia, water licenses (e.g., 5C licenses under the Rights in Water and Irrigation Act 1914) typically require 6–12 months for approval, depending on factors like water volume, environmental sensitivity, and stakeholder consultation. The 3–4 month approval for Mulgabbie North’s water license demonstrates exceptional efficiency, driven by:

• Small-Scale Trial: The trial heap leach’s modest water demand (450,000 kL) minimizes environmental concerns, such as groundwater depletion in the arid Eastern Goldfields region, 135 km northeast of Kalgoorlie.
• Existing Tenure: The project operates on a granted mining lease (M28/240) and miscellaneous licenses (L28/46, L28/47), reducing regulatory complexity.
• Proactive Engagement: Completed heritage and flora/fauna surveys indicate early consultation with Traditional Owners and environmental stakeholders, streamlining DWER’s review process.
• Regional Context: DWER’s familiarity with mining projects near Kalgoorlie and Northern Star’s Carosue Dam (3.5 km away) likely facilitated a faster assessment, as the area’s hydrogeology is well-documented.

This rapid approval provides a positive signal for the efficiency of other permits and the project’s overall regulatory pathway.

Implications for Other Pending Permits

The January 2025 update emphasizes a “simplified and expedited permitting process” for the trial mining and heap leach operation, with the trial heap leach permit (likely a Works Approval from DWER under the Environmental Protection Act 1986 and a Mining Proposal from the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS) under the Mining Act 1978) as the primary pending approval. The water license’s efficiency, combined with progress on environmental surveys and designs, informs the following:

1. Trial Heap Leach Permit (Works Approval and Mining Proposal):
   • Expected Timeline: The water license’s 3–4 month approval suggests DWER and DEMIRS could process the trial heap leach permit in a comparable or slightly longer timeframe, likely 3–6 months from submission. The trial’s small scale reduces the scope of environmental and technical assessments compared to full-scale operations, which can take 12–24 months. Given the near-complete trial designs by April 2025, the permit application is likely submitted or under review, with approval possible by mid-2025 (e.g., July–September 2025).
   • Progress Indicators: The January update’s mention of ongoing mine design and site layout, advanced to near-completion by April 2025, implies that technical submissions (e.g., heap leach liner designs, cyanide management plans, tailings storage plans) are well-developed. The completed heritage survey and near-final flora/fauna report (expected shortly after January 2025) fulfill key prerequisites for DWER’s Works Approval, reducing the risk of delays from incomplete documentation.
   • Efficiency Factors:
     • Simplified Permitting: The trial’s low environmental footprint (e.g., smaller footprint than full-scale heap leaching, limited cyanide use) aligns with the update’s claim of simplified permitting, likely requiring a less rigorous environmental impact assessment.
     • Net-Zero Credentials: The project’s use of LINE Hydrogen’s green hydrogen to replace diesel aligns with Western Australia’s sustainability goals, potentially expediting DWER and DEMIRS approvals by demonstrating environmental responsibility.
     • Expertise: Brendan James’ 25+ years of heap leach experience (e.g., successful operation of White Dam in South Australia) ensures high-quality permit applications, minimizing revisions or rejections.
     • Regional Familiarity: The project’s location near Kalgoorlie and Carosue Dam leverages established regulatory frameworks, as regulators are accustomed to reviewing heap leach projects in the Eastern Goldfields.
   • Risks: Potential delays could stem from specific heap leach concerns, such as cyanide containment or groundwater protection, though the trial’s small scale mitigates these. The flora/fauna report, if it identifies protected species or habitats, could trigger additional studies, but the completed fieldwork suggests low likelihood of major issues. Stakeholder objections (e.g., from environmental groups) are possible but less likely given the project’s net-zero focus and early heritage engagement.
2. Flora and Fauna Survey Report:
   • Expected Timeline: The January update notes the final report is expected “in the next few weeks,” suggesting completion by February–March 2025. The April 2025 quarterly report does not confirm receipt but implies it is imminent or received, as trial designs are near-complete. DWER typically reviews such reports within 1–3 months, with approval likely by mid-2025 if no significant ecological constraints are identified.
   • Efficiency Factors: The completed fieldwork indicates thorough data collection, and the project’s small trial footprint (within the existing mining lease) reduces the scope of environmental review. The Eastern Goldfields’ well-studied ecology further streamlines DWER’s assessment.
   • Risks: If the report identifies rare species or habitats, additional mitigation plans could delay permitting by 3–6 months. However, the project’s proximity to existing mining operations (e.g., Carosue Dam) suggests a low-risk environmental profile.
3. Other Environmental or Ancillary Permits:
   • Heritage Approvals: The completed heritage survey satisfies requirements under the Aboriginal Heritage Act 1972, clearing a major regulatory hurdle. This step, already achieved, eliminates delays from cultural heritage disputes, which can stall projects for months.
   • Dangerous Goods License: Heap leaching requires cyanide, regulated under the Dangerous Goods Safety Act 2004. A license from DEMIRS is likely needed for the trial, but its application would align with the Works Approval process. Given the water license’s speed, this could be processed in 3–4 months, assuming submission by April 2025.
   • Efficiency Factors: The project’s proactive approach (e.g., early surveys, net-zero focus) and small trial scale enhance the likelihood of concurrent or fast-tracked approvals for ancillary permits.
4. Full-Scale Permitting (Post-Trial):
   • Relevance: The water license’s efficiency is less directly applicable to full-scale permits, which require broader assessments (e.g., larger Works Approval, Mining Proposal, and potentially an Environmental Protection Statement). These could take 12–24 months post-feasibility study (September 2025). However, the trial’s success (e.g., demonstrating environmental compliance, gold recovery) could streamline full-scale approvals by providing real-world data, potentially reducing timelines to 12–18 months.
   • Efficiency Factors: The project’s regulatory track record, established through the trial, and its net-zero credentials will support faster reviews. The Eastern Goldfields’ mining-friendly regulatory environment further aids efficiency.

Implications for the Project Overall

The rapid water license approval (3–4 months) and progress outlined in the January 2025 update, corroborated by April 2025 advancements, indicate a highly efficient project trajectory, with significant implications for the timeline, risk profile, and operational outlook:

1. Timeline Acceleration:
   • Feasibility Study (September 2025): The fully funded study, supported by completed heritage and flora/fauna surveys, geotechnical drilling (one diamond hole by April 2025), and metallurgical drilling (one diamond and one RC hole), is on track for completion by September 2025. The water license and near-complete trial designs ensure regulatory and technical inputs are in place, enhancing the study’s reliability and likelihood of a bankable outcome.
   • Trial Production (2026): The water license, completed surveys, and advanced trial designs position the project for trial production in 2026, aligning with the goal of a cash-positive operation. If the trial heap leach permit is approved by mid-2025 (e.g., July–September), trial mining and leaching could commence shortly after the feasibility study, targeting the 260,000-ounce resource (11.6 Mt @ 0.70 g/t Au, 88.9% recovery in prior tests). The trial’s small scale and simplified permitting reduce regulatory delays, supporting a 2026 start.
   • Full-Scale Production (2027): Trial data (e.g., gold recovery, environmental compliance) will inform full-scale permitting, potentially fast-tracking approvals to 12–18 months post-feasibility. Full-scale production remains achievable by 2027, assuming financing and permits are secured promptly. The initial target of 60,000 ounces could scale with resource growth (e.g., from New Cross Fault).
2. Risk Reduction:
   • Permitting Risks: The water license’s rapid approval and completed surveys significantly de-risk the trial heap leach permit, a critical milestone. The simplified permitting process, as emphasized, lowers the regulatory bar, and the project’s net-zero focus (via LINE Hydrogen’s green hydrogen) aligns with DWER and DEMIRS priorities, reducing objection risks. The heritage survey’s completion eliminates cultural heritage delays, a common issue in Western Australia.
   • Technical Risks: Geotechnical drilling ensures trial pit stability, while metallurgical drilling refines heap leach parameters (building on 88.9% recovery), minimizing operational uncertainties. Brendan James’ expertise ensures robust design and compliance, as proven at White Dam.
   • Financial Risks: LHBM’s full funding of the feasibility study and trial operations, with a 50:50 profit split, eliminates OzAurum’s capital burden. The $4 million break fee (waived for permitting issues) incentivizes LHBM’s commitment. The trial’s cash-positive goal enhances financial viability, attracting potential lenders for full-scale development.
   • Environmental Risks: The completed flora/fauna fieldwork and heritage survey address key environmental and cultural concerns, reducing the likelihood of delays from regulatory or community pushback. The pending flora/fauna report is a minor risk, but its imminent completion suggests low probability of major issues.
3. Project Efficiency:
   • Operational Streamlining: The trial’s small scale, existing mining lease, and proximity to infrastructure (3.5 km from Carosue Dam, 135 km from Kalgoorlie) optimize logistics and regulatory processes. The Eastern Goldfields’ mining-friendly environment supports efficient permitting and operations.
   • Net-Zero Advantage: The use of green hydrogen positions Mulgabbie North as a leader in sustainable mining, enhancing regulatory goodwill and investor appeal. This aligns with global ESG trends, potentially unlocking premium financing or partnerships.
   • Exploration Upside: While not directly tied to the trial, the New Cross Fault discovery (February 2025, e.g., 16m @ 3.21 g/t Au, 4m @ 10.22 g/t) underscores the project’s scalability. Planned RC drilling in 2025 (pending rig availability) could expand the 260,000-ounce resource, enhancing long-term value but not impacting the trial timeline.
4. Critical Considerations:
   • Trial Heap Leach Permit: The water license’s efficiency suggests the trial permit could be approved by mid-2025, but confirmation is critical. A delay beyond September 2025 could push trial production to late 2026, impacting the cash-positive goal. The near-complete designs and completed surveys mitigate this risk, but stakeholders should monitor ASX announcements or DWER’s Environmental Approvals Register for updates.
   • Flora/Fauna Report: The report’s imminent release (expected February–March 2025) is a minor risk. If it identifies ecological constraints, additional studies could delay permitting by 3–6 months. The project’s small footprint and regional context suggest low likelihood of significant issues.
   • Financing for Full-Scale: While the trial is funded, full-scale production requires additional capital. The feasibility study’s outcome (September 2025) must demonstrate economic viability to attract lenders, with gold price volatility (US$2,577/oz in September 2024) as a variable. The trial’s cash flow potential strengthens the financing case.
   • Rig Availability: The January update does not mention rig constraints, but the February 2025 New Cross Fault announcement noted delays in follow-up RC drilling. While exploration is secondary to the trial, resource growth depends on timely drilling, which could impact long-term valuation.

Overall Project Outlook

The January 2025 update, combined with the water license’s 3–4 month approval, paints a picture of a highly efficient project advancing toward trial production in 2026 and full-scale production by 2027. The rapid water license approval reflects DWER’s responsiveness and the project’s low-risk profile (small scale, existing tenure, proactive surveys, net-zero focus), suggesting that the trial heap leach permit and ancillary approvals (e.g., flora/fauna, dangerous goods) could be processed in 3–6 months, likely by mid-2025. This keeps the feasibility study on track for September 2025, with trial operations poised to generate cash flow in 2026, de-risking the path to full-scale production.

The project benefits from:

• Strong Partnership: LHBM’s funding and Brendan James’ expertise ensure execution efficiency, as seen in the rapid progress on designs and drilling.
• Strategic Location: Proximity to Carosue Dam and Kalgoorlie minimizes logistical and regulatory hurdles.
• Sustainability: The net-zero goal enhances regulatory and investor appeal, positioning Mulgabbie North as a model for green mining.
• Exploration Potential: The New Cross Fault discovery supports long-term resource growth, though it’s secondary to the trial’s immediate goals.

Remaining risks include securing the trial heap leach permit, the flora/fauna report’s findings, financing for full-scale operations, and exploration drilling delays. However, the project’s momentum, regulatory track record, and LHBM’s commitment mitigate these, making Mulgabbie North a promising near-term producer with significant upside.

Conclusion

The January 2025 update, alongside the water license’s approval in 3–4 months (January–April 2025), indicates high permitting efficiency for the Mulgabbie North Gold Project, driven by its small-scale trial, proactive surveys, net-zero credentials, and regional familiarity. This suggests the trial heap leach permit and ancillary approvals could be secured by mid-2025 (3–6 months from April), keeping the feasibility study on track for September 2025 and trial production in 2026. The project’s overall progress is robust, with completed heritage and flora/fauna surveys, geotechnical drilling, and near-final designs reducing regulatory and technical risks. Full-scale production by 2027 remains achievable, with exploration upside (e.g., New Cross Fault) enhancing long-term value. Stakeholders should monitor the trial permit’s status via ASX announcements or DWER’s register and the flora/fauna report’s outcome.