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Regis Resources approves underground development at Rosemont Gold Mine

The company anticipates portal development to begin in the March quarter next year.

process plant
Rosemont underground has a resource of 1.4 million tonnes at 5.1 g/t gold

Regis Resources Ltd (ASX:RRL) has received board approval to develop an underground gold mine directly below the operating open pit at its Rosemont project north of Laverton in Western Australia.

The combined open pit and underground mine is scheduled to deliver 10.3 million tonnes at 1.72 g/t gold for 570,000 ounces over a 5-year mine life.

Open pit reserves make up 62% of this schedule with the remaining 38%, or 214,000 ounces, to be delivered from the underground operation.

UG mine “a robust business in its own right”

Regis executive chairman Mark Clark said: “The decision to approve the first development of an underground mine at one of our Duketon operations is a very exciting step for Regis.

“We believe that the approved Rosemont underground operation is a robust business in its own right, but just as importantly will see the infrastructure in place to grow that mine through exploration from an established underground footprint.

“This growth opportunity will be targeted both laterally between the two mining zones and at depth and along strike.”

Delivering an extra plus-35,000 ounces

The underground component of the expanded operation has a resource estimate of 1.4 million tonnes at 5.1 g/t gold.

Mining rates of the expanded operation will continue to be around 2.1 million tonnes per annum, with the underground component of this schedule being in the range of 480-600,000 tonnes per annum.

Once the underground operation is at fully capacity, the combined open pit and underground mine will produce at a run rate of 120-130,000 ounces per annum.

This is an estimated 35-45,000 ounce increase on production from the average grade of the open pit alone.

Clark said: “There is a very strong opportunity to replicate this development path at Garden Well in the near term and then at other Duketon satellite pits in due course.”

Significant underground exploration effort

The operating cost of the combined operation is expected to be $1,015 per ounce, with the underground component alone $1,154 per ounce.

Pre-production capital for the underground expansion is expected to be $29.4 million and a further $9.7 million forecast over the life of mine.

Maximum cumulative cash outflow is expected to be $38.5 million.

Both surface and underground infrastructure included in this capital investment will also service a significant underground exploration effort along the highly prospective 4-kilometre Rosemont shear zone.

Upgraded mineral resource estimate

Development work, including permitting, ordering of long lead capital items and underground mining contract tendering, will commence in the current quarter.

The company will also complete an update mineral resource estimate in the current quarter, which will include recent infill and extensional drilling.

Portal development at the southern end of Rosemont Main is expected to begin in the March quarter 2019 and processing of underground ore due in the December quarter 2019.

Quick facts: Regis Resources Ltd

Price: 4.12 AUD

ASX:RRL
Market: ASX
Market Cap: $2.09 billion
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