Bardoc Gold Ltd (ASX:BDC) has undertaken a cashflow optimisation study at its flagship gold project in Western Australia that validates the plan to accelerate production growth from its cornerstone Aphrodite deposit and lifting production by 80,000 ounces in the first five years.
Changes to the mine schedule have focused on bringing production at Aphrodite forward and mining the high-grade underground deposits.
This is expected to see the company become a 150,000+ ounces per annum producer by year three of operations – a production rate that BDC intends to sustain through potential future resource and reserve growth at the Zoroastrian and Aphrodite underground mines.
The Bardoc Gold Project is 40 kilometres from Kalgoorlie in Western Australia's Goldfields region.
Other key benefits of the proposal include allowing mining of higher grades at Aphrodite at an early stage of the production profile, providing improved cash-flows to deliver earlier repayment of debt and allowing for continuing exploration at Zorastrian with a view to increasing resources ahead of mining.
Importantly, the new plan will allow Bardoc to reap the benefits of underground mine extensions earlier in the project’s life.
A Final Investment Decision (FID) is scheduled for December 2021.
Returning value to shareholders earlier
Bardoc Gold’s chief executive officer Robert Ryan said the new strategy would deliver an increased production, cash flow and financial returns.
“The plan also de-risks the project by bringing forward the capital expenditure for the flotation circuit and increasing gold production by 80,000 ounces in the first five years.
“The increased cash flows achieved in the first five years of operations will improve the debt repayment profile and ensures Bardoc can return value to shareholders earlier.”
As part of the Study, Bardoc has taken into account the rising costs across the mining industry in its revised financials.
Despite these forecast increases, the project generates extremely robust margins of over A$1,000/ounce at current prices.
Mine rescheduling
As part of this revised strategy, the proposed processing facility would be at Aphrodite, rather than next to the Zoroastrian and Excelsior deposits.
This provides the opportunity to extract further value from the 1.6-million-ounce Aphrodite Project and, in the future, from the highly prospective Omega, Sigma and Gamma Lodes, where recent exploration success has highlighted the strong potential for significant resource growth.
Capital cost estimate
Since the release of the DFS and processing plant design in March 2021, key input prices of steel and labour have increased significantly.
To reflect these input price changes, Bardoc has increased the contingency for the processing plant construction up to $22.7 million.
With the recent decline in iron ore prices and steel prices, there is potential to reduce the contingency closer to making an FID, which is scheduled for Q4 2021.
The pre-production capex includes $20.7 million for the upfront construction of the flotation plant in year 1 (previously year 2) as a result of bringing forward development of the cornerstone Aphrodite deposit ahead of Zoroastrian and Bulletin open pits.
It also contains an offset between open pit mining (-$13.2 million) and underground mining (+$23.7 million) from rescheduling Aphrodite and Zoroastrian, which when coupled with industry cost increases has led to a net increase in pre-production CAPEX of $10.5 million.
Looking ahead
Next steps for Bardoc Gold include:
- Detailed engineering design for tailings dam and processing plant underway;
- Debt discussions well advanced with Australian and international financial institutions;
- Mining contract tenders to be issued in Q4 2021; and
- Diamond core drilling ongoing at Zoroastrian targeting reserve and resource upgrades.