Mutiny Gold moves closer to full ownership of Gullewa gold project

Mutiny Gold (ASX: MYG) has taken another major step towards full ownership of the Gullewa Gold Project in Western Australia, with the A$4 million instalment payment to ATW Gold Corp Australia Pty Ltd.

Mutiny has now paid a total of A$7 million, and has the right to purchase Gullewa by scheduled payments totalling $9 million plus replacement bonds for 70% ownership - with the right to acquire 100% for a further $4 million.

The final $2 million required to move to 70% (to bring paid total to $9 million) is not due until 30 October 2011.

Mutiny is currently well funded to meet this future commitment, in addition to funding the upcoming exploration activities - due to completing a $9.7 million heavily oversubscribed capital raising in July.

What is so important about Gullewa is that the project hosts the Deflector deposit, which already holds some resources in the higher confidence categories, with Measured 130,000 gold ounces and 12,000 tonnes of copper, and Indicated 105,000 gold ounces and 4,500 tonnes of copper.

The deposit contains a total resource of; 3.4 million tonnes at 5.4g/t gold, 4.7g/t silver and 0.8% copper for 590,000 gold ounces, 510,000 silver ounces and 25,500 tonnes of copper.

Mutiny has an exploration target of between 1.65 million to 2.5 million gold ounces.

Mutiny has said that the company has resolved to expand the scope of the Feasibility Studies to incorporate a re-assessment of Deflector, which is now expected to support production in the order of 100,000 to 120,000 gold ounces annually when fully ramped up.

The reason is exploration has uncovered high grade intercepts in multiple locations, which predicate likely extensions to the planned open pit and, also, importantly, confirm the down plunge continuity with depth of high grade shoots that can be included in underground mine planning

The results provide further confirmation of the exploration potential of the Deflector Corridor but they are likely to be just the tip of the iceberg as far as upside in exploration target and production ounces.

Scoping Study - Recap

- IRR of 83%
- NPV of $187 million – likely to increase significantly
- Cash surplus of $427 million after payback of capital costs
- Capital cost of $52 million and State Royalties including A$19 million for plant upgrade and A$12 million for the first three months working capital
- Annual production of 50,000 ounces gold, 2,000 tonnes copper and 34,600 ounces silver
- Cash costs over first ten year life of mine estimated at $524 an ounce
- Contained gold ounces of 578,000 ounces (comprising 100,000 ounces open pit and 478,000 ounces underground)
- Estimated average production grade of ore ranges from 4.1g/t gold to 6.5g/t gold