What to do with the OP cash flow?
From PXG's presentation today;
“Combination plant under review
–1.7Mt pa conventional processing plant ( ~100,000oz pa)
–1.2-1.5 Mt pa heap leach operation along side (~25,000oz pa)
•Estimated Capital; $106m mill, $25m heap leach.”
Something similar for Buccaneer could easily be funded internally from OP cash flow (with less than 50% of free cash projected over two years by scoping study) with plenty left over to fund growth at OP, future discoveries, or maybe just a nice capital return or strong dividends for shareholders after a few years? Something of similar size for Buccaneer could give us greater than a 10 year mine life.
PXG;
"Common crusher plant at 4mtpa feeding both heap leach and mill
•Mill treats high grade material at 1.9g/t and 94% recovery1
•Heap leach treat low grade at 0.67g/t and 75% recovery1
•High grade gold solution from the heap leach pumped to the mill for recovery."
Will be interesting to see if Buccaneer is suitable for something similar. Processing plant for higher grade zones and heap leach for lower grade. We certainly have higher grade zones, with the main question how much do we define at 1.5-2g/t?
E.g. higher grade zones;
81m @ 2.03 g/t gold,
• 41m @ 3.54g/t gold
• 6m @ 19.84g/t gold
67m @ 2.07g/t gold
From ABU’s last presentation;
“Further structural studies planned to redefine continuity of higher grade >1.5g/t Au.
? Visible free gold observed regularly through mineralised sections.
? Further extensional drilling along the Caribbean – Cypress Zone aiming to extend >1.5km of structure not yet tested with 6m @ 20.37g/t recently hit at Cypress.”
Considering the likely large cash flow from OP I think Buccaneer will be developed with the main question being what type and size of development (the PXG style of development may not be at all appropriate for Buccaneer). We should get some idea when we see the scoping study.
In the mean time we have high margin OP development near term to look forward to.
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