Alice Queen Ltd (ASX:AQX), an advanced copper and gold explorer, has moved a step closer to mine development at Horn Island Gold Project with a successful mine scoping study and mineral resource estimate update.
Horn Island is at the northern tip of Queensland, hosting a small township of about 700 people. The island is well serviced by air via a sealed airstrip and sea via a regular service between the island and Cairns.
Mining at the Horn Island pit on the eastern side of the island was undertaken over a two-year period in the late 1980s when the mine under-delivered on expected gold grade.
Aggressive exploration programs
“The Horn Island Scoping Study has been an exciting exercise in endeavouring to determine some high-level understanding about the potential economics of the project,” Alice Queen managing director Andrew Buxton said.
“The most exciting thing, however, is the prospect that the range of numbers contained in this report represent the minimum starting position of a potential mine.
“We believe that real opportunities exist to find significantly more gold on Horn Island. Accordingly, while we are very pleased with the results of the scoping study, we are also keenly focused on our forthcoming exploration programs to ensure sure they are as aggressive and effective as possible.
“In this way, we leverage the opportunity of what we can now consider the base case for the Horn Island gold mine to one with significantly greater scale.”
Scoping study highlights
The scoping study is a preliminary technical and economic study of the potential viability of developing the Horn Island Project as a mine and was carried out to enable the company to decide how to proceed to more definitive studies.
Highlights include:
- Life of Mine (LOM) 8.5 years;
- Average production rate of 37,000 ounces gold per annum;
- Mill feed to Waste Ratio 2.5:1;
- Initial capital cost A$75 million;
- Capital payback period of 27 months (2.25 years);
- Net cashflow (EBITDA) of approximately A$200 million;
- Net Present Value (NPV) at 5% discount of approximately $140 million;
- Internal Rate of Return (IRR) of 44.3%; and
- All-in Sustaining Costs (AISC) of A$1,388/ounce.
Updated mineral resource
The mineral resource estimate is reported at two cut-offs representing processing options under the scoping study assessment.
A cut-off of above 0.6 g/t gold represents a processing option of crushing and particle sorting preconcentration followed by gravity and CIL processing.
The lower grade cut-off above 0.4 g/t replicates the flowsheet but with a prior preconcentration step of bulk ore sorting prior to the particle sorting.
Forward work plan
A major component of the forward work plan to advance the study is dewatering the open pit to enable in-pit drilling.
Currently, a creek has been diverted to flow into and out of the mine void during periods of high rainfall in the wet season. Access to the mine void will be required in order to complete in-pit drilling.
In 2018, the Alice Queen engaged AECOM to complete a Pit Water Assessment Study to characterise the water quality to identify options for dewatering the pit. AQX has subsequently had preliminary discussions with Queensland Department of Environment and Science (DES) in relation to the pathway to achieve this.
Other work plan components:
- Further test-work to confirm the efficacy of bulk ore sorting;
- In-pit drilling to further inform the mineral resource;
- Conduct further metallurgical test-work to adequately test the proposed flowsheet;
- Engagement with mining contractors; and
- Environmental studies and permitting.