Mutiny Gold completes Gullewa gold project acquisition, also buys royalty

Mutiny Gold (ASX: MYG) in moving to 100% ownership of the Gullewa Gold Project now has full control of the highly prospective project in Western Australia.

Importantly - Mutiny has also acquired the 10% Net Profit Interest Royalty for 40 million shares, which are escrowed until 15 March 2013. Mutiny was able to move to full ownership of Gullewa with a final payment of A$4 million for the remaining 30% it didn't already own.

John Greeve, managing director of Mutiny, commented: "This transaction simplifies the ownership structure of the Gullewa Gold Project and is a strong demonstration by Mutiny of the value of the Gullewa Gold Project and by Red Hill of Mutiny and the company’s portfolio of assets.”


Deflector - by the numbers, reserves in early 2012

Deflector has a resource of 3.4 million tonnes at 4.9g/t gold for 530,000 gold ounces, 0.85% copper for 29,000 tonnes and 5.7g/t silver for 620,000 ounces.

Measured and Indicated accounts 2.1 million tonnes at 5.2g/t gold for 350,000 ounces, 1.1% copper for 22,000 tonnes and 7.3g/t silver for 490,000 ounces. Inferred is 1.3 million tonnes at 4.5g/t gold for 180,000 ounces, 0.5% copper for 6,000 tonnes and 6.2g/t silver for 130,000 ounces.

Mutiny is now eyeing Reserves to be added into the Definitive Feasibility Study by mid-February 2012.


Spanish Galleon - advanced gold target not to be forgotten
 
Adding some spice to Mutiny's Gullewa project, are the satellite prospects of Pieces of Eight and Spanish Galleon Prospect, which adjoin Deflector to the west.
 
These two prospects have to potential to add an extra dimension to Gullewa with Spanish Galleon already delivering some interesting exploration results, such as 34 metres at 1.9g/t gold and 20 metres at 2.8g/t gold.


Credit Suisse funding facility highlights confidence in Deflector

Providing a major vote of confidence in the Deflector operations, Mutiny has already entered into a $11 million project loan and hedging facility agreement with Credit Suisse.

As part of the facility Mutiny will forward sell 50,000 gold ounces, and recently announced the average price of A$1,847 per ounce - which is above historical Australian gold pricing.

Importantly this forward sale represents less that 10% of Mutiny’s current JORC gold resource. Under the agreement Mutiny will deliver gold to Credit Suisse over the period July 2013 to December 2016.


Deflector - Definitive Feasibility Study

The resource upgrade announced earlier in the month has provided Mutiny with a major boost to the continuing Definitive Feasibility Study, with the company having engaged GR Engineering Services to head up the mechanical engineering and plant design works.

Xstract Group is conducting the mine studies and Mutiny’s in-house project manager and metallurgist, Kevin Reynolds is managing the process as well as overseeing the metallurgical test work.

Earlier in 2011 Mutiny delivered a bumper Scoping Study, which included an IRR of 83%, a NPV of $187 million – which is likely to increase significantly, and cash costs over a ten year life of mine of just A$524 an ounce.

The Scoping Study anticipates two and a half years of open pit mining followed by six and a half years of overlapping underground mining, with the study also recognising the high likelihood of expanding the production levels and extending the mine life.


December 2011 metallurgical performance gains - by the numbers

- Forecast copper recoveries increased to 64% from 58.5% in the oxide zone and copper concentrate grade increased to 35% copper from 21.5% copper;

- Forecast gold recoveries increased to 81% from 77.9% (gravity plus flotation concentrate) for the oxide ore;

- Forecast copper recoveries increased to 84% from 46.5% in the transition zone and copper concentrate grade increased to 20% copper from 16.1% copper;

- Forecast gold recoveries increased to 92% from 82.5% (gravity plus flotation concentrate) from the transition zone; and

- Test work on the primary ore confirms high (+90%) recoveries of copper and gold achieved in earlier test programs.


Gravity recoverable gold between 40% to 55%

Importantly for Mutiny, the gravity recoverable gold test work on all three ore types confirms that 40% to 55% will be recovered in a gravity concentrate from the grinding circuit ahead of the balance being recovered by floatation.

The significance of this method is that it maximises early gold payment.

Mutiny added that oxide ore responds well to the controlled potential sulphidisation flotation technique. This is a standard and proven technique and the financial outcome is that it will lower the reagent cost by around $10 per tonne, which corresponds to a 25% plant operating cost saving

Results also highlight that the transition ore responds well to standard xanthate flotation followed by a controlled potential sulphidisation scavenging stage.

The primary ore flotation will use standard sulphide flotation reagents. Mutiny anticipates that the cleaner tailings and scavenger concentrate will be leached with cyanide to recover the remaining gold, thus maximising the gold recovery.


Future drill programs target 2 million gold ounce operation

To continue to progress Deflector, Mutiny has already formulated drill programs for 2012 and onwards, which is both aimed at increasing the mine life and gold ounces - with the target 1.6 million to 2.4 million ounces of gold.