Auric Mining Ltd (ASX:AWJ) is encouraged by the results of a scoping study for Jeffreys Find gold deposit in the Widgiemooltha-Norseman area of Western Australia, targeting an undiscounted cash surplus of between $9.7 million and $16.7 million as a first processing production target, dependent on the processing method selected.
The company cautions that the scoping study is a preliminary technical and economic study of the potential viability of the project, based on low-level technical and economic assessments that are not sufficient to support the estimation of ore reserves.
Additionally, the outcomes indicated in the study would require additional funding of some $7 million, an uncertain proposition that may lead to the dilution of AWJ shares or ownership over the project.
"Highlights potential"
“The scoping study highlights the potential of the Jeffreys Find Project to generate attractive profit margins and accumulate cash surpluses at current gold prices,” Auric Mining managing director Mark English said.
“We continue to add value to our properties through exploration and development and carefully considered acquisitions.”
Study highlights
The scoping study considers two potential processing options: one 110 kilometres from Jeffreys Find and the other some 230 kilometres.
While both options provide positive study outcomes, the shorter distance is the preferred option, as it would be significantly cheaper.
The study was based on the current gold price of about $2,600 per ounce. The production target is based on an estimated ore reserve of between 18,900 ounces and 24,700 ounces dependent on grade (1.6 g/t to 1.5 g/t).
A combination of these assumptions is estimated to generate an undiscounted cash surplus after payment of all working capital costs – excluding pre-mining capital requirements – of between $9.7 million and $16.7 million.
Pre-mining capital and start-up costs were estimated at between $700,000 and $1.5 million, while working capital requirements are projected to be between $3.8 million and $7.9 million based on a stage one starter pit design with a mine life of less than three months.
The starter pit was estimated to generate undiscounted accumulated cash surplus of between $4.1 million and $8.4 million.