Bellevue Gold Ltd (ASX:BGL) expects a combination of strong drilling results, projected favourable outcomes of recent project optimisation studies and productive commercial discussions with contractors will result in an update to the current 1-million-ounce reserve at its Bellevue Gold Project in Western Australia.
The updated reserve estimate is expected to reflect the ongoing success of infill drilling at Bellevue, aimed at converting more of the inferred resource to the indicated category.
Increased confidence in resource
This increase in resource confidence will be incorporated into an updated reserve, which will also take into account recent engineering and underground mining optimisation work and the advanced successful commercial discussions with key contractors and suppliers.
Key contracts for the project include the underground mining contract, the processing plant EPC contract, the power station IPP contract and the non-processing infrastructure contracts. All of these are at an advanced stage of negotiation and are expected to be finalised and awarded in the June quarter.
A total of 101 underground drill holes for 42,425 metres of drilling have been completed at the Bellevue Gold Project since the Stage 2 feasibility study (FS2) was announced in September last year, and drilling is expected to continue throughout 2022.
Results highlight "excellent continuity"
The latest results continue to demonstrate the excellent continuity and grade of the initial target for reserve conversion, the Deacon North lode area. This has been extended significantly since FS2.
Further high-grade intersections from infill drilling not included in the current reserve estimate at the Deacon North lode include:
- 2.1 metres at 42.8 g/t gold from 411.6 metres, including 0.6 metres at 142.0 g/t from 411.9 metres;
- 2.2 metres at 25.7 g/t from 394.3 metres;
- 1.8 metres at 22.6 g/t from 458.8 metres;
- 2.5 metres at 14.2 g/t from 425.5 metres; and
- 1.7 metres at 16.0 g/t from 378.3 metres.
Previously released high-grade results from infill and extensional drilling at the Deacon North area similarly not included in the current reserve estimate, and received after FS2, include:
- 7.4 metres at 16.9 g/t gold from 485.5 metres;
- 8.9 metres at 12.7 g/t from 454.7 metres;
- 3.1 metres at 31.9 g/t from 518.9 metres; and
- 3.8 metres at 24.6 g/t from 503 metres.
The inferred resource conversion drilling program will underpin an updated resource/reserve estimate scheduled for this quarter.
Bellevue is set to complete its optimisation studies and finalise the reserve update in the June quarter of 2022. This is expected to form part of a wider project update which will include the details of key contracts.
Optimisation study work has focused on cost and productivity benefits from changes to the mine plan, including mining sequence, level spacing and de-risking opportunities. These changes are expected to drive pre-production cost reduction and life of mine efficiencies since FS2.
Production estimates revised
Based on discussions held to date, Bellevue believes the project’s total pre-production costs will be in line with those forecast in FS2.
The company has more than $373 million in available liquidity to fully fund the project into production with $173 million in cash and equivalents (as at December 31 last year) and a fully undrawn $200 million loan facility with Macquarie Bank.
Bellevue managing director Steve Parsons said: “We are extremely pleased with the way that the leading drivers of our project, including the updated reserve and key contracts, are advancing.
“From a resource perspective, we are benefiting from the ability to drill from underground allowing for greater penetration rates, shorter collar lengths and therefore more effective, faster drilling for reserve conversion.
“The drilling results, the optimisation studies and the contractual discussions are coming together to paint a very bright outlook for the project.
“Given the advanced stage of all these key workstreams and the extent to which they interact, we are confident that we will continue to de-risk the project and look forward to providing further firm evidence of how technically and financially robust it is in a broader project update this quarter.”