LionOre Mining International (LIM-T) has received the positive results of an independently prepared bankable feasibility study on the company’s 60%-owned Thunderbox gold deposit in the northeastern goldfields of Western Australia.
Australian junior Dalrymple Resources holds the remaining 40% of the project.
The study proposes an open-pit mining operation to target mineral reserves totalling 10.89 million tonnes grading 2.43 grams gold per tonne, including proven reserves of 10.51 million tonnes averaging 2.45 grams gold and 380,000 tonnes running 1.85 grams.
The bulk of the reserves (7.54 million tonnes grading 2.38 grams gold) lie in the primary zone. The rest are in the oxide zone. The reserve estimate employed a US$254-per-oz. gold price. Cutoff grades were 0.7 gram gold in the oxide zone and 1.1 grams gold in the primary zone. Total resources stand at 30 million tonnes grading 2.2 grams gold.
The envisaged pit will have a waste-to-ore strip ratio of 3.5-to-1. Ore would be sent to an on-site, stand-alone treatment facility. Initially, the mine life is pegged at five years, based on current reserves. The company says underground mining, within the existing resource base, and ongoing exploration may increase the mine’s lifespan.
Metallurgical testing pins gold recoveries by cyanide leaching at 96-98% in the oxide zone and 92-96% in the primary zone. An on-site ore treatment plant would employ single-stage crushing, a semi-autogenous grinding mill and a ball mill with conventional carbon-in-leach and elution circuits.
During the first year, the plant would run through 2.5 million tonnes of ore from the oxide zone, followed by 2 million tonnes per year from the primary zone. First-year production is projected at more than 220,000 oz. Production in subsequent years would be about 150,000 oz. per year. Over the mine’s life, production would tally more than 800,000 oz.
Total pre-production capital costs for development are US$38 million. Life-of-mine cash operating costs are expected to ring in at US$157 per oz. First-year costs are pegged at less than US$110 per oz. Based on current reserves and a gold price of US$270 per oz., the project is expected to generate pretax cash flow of US$51 million over the first five years. The internal rate of return is 50% and is expected to kick in a year after production begins.
The partners are looking for project financing and all the necessary statutory approvals. A formal development decision is expected within the next few months. Production would gear up a year after a positive decision.
At Thunderbox, all 30 lines of reconnaissance rotary-air-blast drilling (on lines up to 1.2 km apart) have cut mineralization of greater than 1 gram gold per tonne. In the medium term, the company plans to focus on identifying additional open-pittable oxide resources.
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