DFS estimates Regis Resources will need almost $1 billion to...

DFS estimates Regis Resources will need almost $1 billion to develop McPhillamys gold mine in NSW

Neil WatkinsonKalgoorlie Miner

Tue, 23 July 2024 2:00AM

Northern Goldfields producer Regis Resources has revealed the key numbers for developing the McPhillamys gold project in New South Wales — including required pre-production capital of almost $1 billion.

Regis told the ASX on Monday the definitive feasibility study for the McPhillamys project in the Central Tablelands of NSW said $996 million would be needed to develop the mine, including $73m of contingency and $70m of pre-production operating costs that were capitalised.

The study estimated McPhillamys could produce 1.71 million ounces of gold across a mine life of 9.4 years, with peak annual production of 235,000oz and an average of 187,000ozpa at full production.

This would generate life-of-mine gross revenue of $5.2b at a gold price of $3000/oz.

This price meant a pre-tax net present value of $750m, with a pre-tax internal rate of return of 17.1 per cent; post-tax NPV was $451m, and post-tax IRR was 13.1 per cent.

The project pre-tax payback period was 5.3 years, and the post-tax payback period was 6.1 years.

The study said a gold price of $3500/oz meant a pre-tax NPV of $1.31b and pre-tax IRR of 24.5 per cent, with the post-tax figures being $848m and 19 per cent, respectively.

The payback period at this higher price was four years.

It said with an average all-in sustaining cost of $1580/oz, McPhillamys would deliver total earnings before interest, tax, depreciation and amortisation of $2.8b and pre-tax cash flow of $1.5b.

The processing plant would be capable of 7 million tonnes per annum at a grade of 1.01 grams per tonne, with a gold recovery rate of 87 per cent, the study said.

The study said its outcomes were based on an updated mineral resource estimate of 70Mt at 1.0g/t for 2.26Moz of contained gold, and an ore reserve of 56Mt at 1.1g/t Au for 1.89Moz of contained gold.

Regis managing director Jim Beyer said the study was the culmination of 12 years of work.

“The study clearly demonstrates the opportunity and value proposition that was recognised when we acquired the project in 2012,” he said.

“McPhillamys is a long-life, low-operating-cost, expandable open-pit project.

“It will produce profitable ounces for our shareholders while generating significant benefits for our local and regional communities and other stakeholders.”

Mr Beyer said between now and when the project was presented for a final investment decision in the 2025-26 financial year, the company would advance value engineering and optimisation works to enhance the project economics.

“We will work on optimising the capital requirements and seek to expand the current mining inventory,” he said.

Regis has a 30 per cent stake in the Tropicana gold mine 330km north-east of Kalgoorlie-Boulder, and also operates the Duketon gold project north of Laverton.

Regis’ share price eased 1c, or 0.5 per cent, to $1.91 by the close on Monday.