A potentially significant South Australian gold project is a little closer to a restart today, with Barton Gold delivering a maiden scoping study for its Tunkillia development in the Gawler Craton.
The culmination of more than five years of work, Tunkillia is defined as modest put highly profitable, with a two-year construction and six-year mine life to recover 833,000 ounces gold and 1.99Moz silver at 130,000ozpa gold and 311,000ozpa silver.
Development costs are estimated at A$492 million including contingency and contracting costs, with an initial $374 million capex, giving it a pre-tax A$512 million net present value, internal rate of return of 40% and payback of around 24 months.
The bulk open pit operation has estimated all-in sustaining costs of A$1917/oz after silver credits and could deliver cash flow of $1626/oz assuming pricing of $3000/oz gold and $37.50/oz silver.
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Estimated revenue is $3 billion, with an operating pre-tax cash margin of $1.3 billion.
A critical period is the initial 18-month development that would target higher grade area of 1.26gpt gold and 3.32gpt silver compared to the average 0.93gpt gold and 2.52gpt silver to recover an initial 181,00oz and 420,000ioz silver and generate $396 million in free cash flow.
Barton managing director Alex Scanlon said the company had taken "fairly conservative" assumptions but believed Tunkillia today would "rank favourably among Australian gold producers" – seventeenth out of 47 on an AISC/oz produced basis.
"This is only a preliminary study, and we have already identified multiple areas for potential optimisation in terms of process design, capital costs, operating costs and growth in the life of mine and materials schedule," Scanlon said.
Big plans
Barton has 1.5Moz gold in resources at Tunkillia and believes it is just the start of a new standalone Gawler Craton project that could unlock other assets in the region based only on the Area 223 and Area 21 pits and a new 5Mtpa carbon-in-leach plant.
Tunkillia is 550km northwest of Adelaide and was part of a package of assets once owned by WPG Resources.
Byrnecut installed receivers at WPG in 2018 when it became clear trying to balance the demands of the Challenger underground with debt repayments was impossible.
Barton secured Tunkillia, Tarcoola, Challenger and the mothballed 650,000tpa Central Gawler mill in 2019 and has been working to define a restart plan ever since.
It initially looked at a lower-cost restart of the existing carbon-in-pulp mill but quickly started thinking bigger.
The longer-term aim is to expand operations, bringing in the neighbouring Tarcoola project that hosts 30,000oz at the Perseverance pit and may offer high-grade blending opportunities.
Perseverance was partially mined between 2016 and 2018, and the orebody remains open, with some promising structures defined below the pit.
An optimised scoping study is targeted within the next 12 months.
'The next Capricorn'
Scanlon said he wanted Barton to be the "next Capricorn Metals", which had transformed itself from a minnow to a $2 billion gold leader with the 4.5Mtpa, 120,000ozpa Karlawinda development in WA over the past decade.
A successful development could support exploration of the kilometres-wide Kalgoorlie-style shear zone that has been defined.
There is considerable scope for further exploration.
The area around Tarcoola sparked SA's 1893 gold rush, with some 77,000oz grading 37.5gpt reportedly recovered before 1955. The area was largely fallow until the late 1990s when calcrete geochemical surveys were developed.
There are other explorers having success in the region, notably Marmota, which has just resumed drilling new gold targets, and Indiana Resources.
Barton shares were off 2% today at 24.5c, capitalising it at $54 million.
The stock has traded between 18-36c over the past year.
