Bellevue Gold Ltd (ASX:BGL) has completed several important milestones in the development of the Bellevue Gold Project in Western Australia, de-risking the cost, production and cashflow outlook.
The company has already committed 90% of pre-production costs for project development and has now increased probable ore reserves 29% to 1.34 million ounces.
Life-of-mine (LoM) reserves and mineral inventory have similarly been increased to 1.85 million ounces, potentially underpinning a LoM of 10 years with reserve estimates independently verified by mining consultant Entech, based on a conservative gold price of A$1,750 per ounce.
Tier-1 contractors have also been appointed - Develop Global Ltd has begun mining activities while GR Engineering Services has been contracted to undertake early work programs with long lead and critical path items already ordered.
Bellevue has forecast the first five years of production to average 200,000 ounces per annum at a bottom-quartile all-in sustaining cost (ASIC) of A$1,000-1,100 an ounce, calculated to produce an average LoM free cash flow of $231 million per annum pre-tax for the first 10 years at a gold price of A$2,500 per ounce, with an internal rate of return (IRR) of 68%.
“Significantly de-risked the project”
“We are rapidly executing the project in line with all the key forecasts contained in our extensive financial and technical analysis,” Bellevue Gold managing director Steve Parsons said.
“This extensive work program, which has included leading independent experts, show the Bellevue Project will be a 200,000-ounce a year producer with low operating costs and strong cashflow generation in the tier-one location of WA.
“By locking in 90% of our pre-production costs and underpinning our 10-year mine life with 1.34 million ounces in reserves, we have significantly de-risked the project and put us on a path to realising the immense value of this exceptional asset.”
Bellevue emphasises that the 27.6% of inferred ounces within the reserve carries a low level of geological confidence, with no certainty they will be converted into indicated ounces or that production targets will be realised.
Nonetheless, the company believes project has ‘substantial’ scope for organic growth, holding 1.3 million ounces outside the current mine plan that may be converted through resource drilling and further opportunities for exploration, as the deposit remains open in all directions.
Long section looking east showing the current 1.34-million-ounce project reserve in yellow and the areas of the Feasibility Study 2 Reserve (1.04 million ounces) in light red and the Feasibility Study 1 Reserve (690,000 ounces) in dark red.
Bellevue is also expected to be one of the lowest carbon emitters per ounce of ASX-listed gold producers, with a forecast range of 0.15 to 0.20 tonnes of CO2 equivalent per ounce.
Underground development is advancing under contractor Develop Global, the project now sitting at 62% completion on the development timeline, with first development ore from the Armand heading expected in the coming quarter.