Hi Dean, great news.
Do you expect to formalize the toll or ore purchase deal with BC8 in the near term to remove that uncertainty?
When do the mining leases expire over those prospects and the SoM?
Will the contractor deal assist with upfront costs by drilling for equity?
I see trucking is not prohibitive at 10g/t which grosses about $134/t in gold at A$4300. Can the route be sorted better? If not can ore sorting or partial processing improve that metric? On that point; can stockpiling can get ahead of any potential wet weather at the Paulsons ROM area - as risk mitigation measure?
At what point do you consider hedging a good idea? Surely approvals, BC8 deal and contracts have to be in place first?
On the excavator utilization; can you get ahead of ore definition near surface at other prospects in time for this to be turned into pre-strip activities?
Thank you in advance, appreciate your efforts to communicate with us all.
Regards, Editor@ GoldOz
The answer from Dean:
Hello GoldOz,
Firstly, thank you for the questions. I can tell that this study is in your realm of expertise.
We have given ourselves until the 3Q to finalise any deal for the development of SoM. If that can be done sooner, then all the better for planning and removing uncertainty.
Those mining leases were only applied for in 2020 and do not expire until 2041.
The commercial outcome that we are looking for would be similar to what BC8 and BTR have done in which all upfront capital costs are covered by the contractor (and repaid through production at cost on an open book basis) with profits being split. This would mean little to no additional capital investment from our side.
Trucking is not prohibitive and is a similar distance as Vivien (5.7g/t Au) was to Mt Magnet (Ramelius). There are not too many options to improve trucking route out in those parts, in particular for a short mine life operation. Ore sorting would certainly be considered as well as optimizing stockpiling and trucking. All of which to be discussed with our partner (all involved are incentivized to reduce costs and risks).
We have not considered hedging at this stage asides from checking at what prices we could hedge at right now for the Scoping Study. Any decision on hedging would be made with our development partner.
Excavator utilisation has been a major discussion point during the scoping study. In our target scenario, we have until early to mid next year to find a solution. This is why our strategy is focused first and foremost on finding additional ounces on the existing mining leases (simplified approvals). We will be drilling these first up this year. We have high hopes for Popeye, Pritchards, and SoM extensions as our top three (internal ranking) with Lead Mine and Two Peaks also to be drilled. At this stage, our plan is to have these drilled first pass commencing in the March Quarter, which would allow us to follow up with resource drilling at mid year. This would give us the time we need for approvals and to extend operations and improve excavator utilisation through multiple pits.
Kind regards,
Dean
DYOR CW
PS Dean has an excellent communication approach - open and direct.
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