The Feasibility Study has been completed in accordance with the CIM Definition Standards on Mineral Resources and Mineral Reserves referred to in the National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and will be filed within 45 days of this release. All figures are in Australian dollars unless otherwise specified.
The Feasibility Study confirms the technical and economic viability of the Project and highlights the measures taken to achieve levels of compliance beyond that of conventional open pit mining because of the proximity to the Stawell community. Self-imposed modified practices have been adopted to mitigate environmental and social impacts, even if not economically optimal.
The Project is currently the subject of an Environmental Effects Statement and Ministerial Assessment. These modified work practices have been adopted in consideration for favourable permitting and works approval.
Substantial work has been done to confirm operational costs, technical support and social impacts. Based on a forecast gold price of A$1,415 per ounce, the Feasibility Study pre-tax NPV (8%) is A$39M with an IRR of 125%. The most positive characteristic of the Project is its high operating margin-economic sensitivity analyses demonstrate the Project NPV to be resilient to downward movement in gold price and potential upward movement in costs. Tables 1 and 2 highlight the Project’s ability to withstand potential market pressures and capacity to capitalize on opportunities.
The total pre-production capital cost is estimated at A$11.99 million and include costs associated with site establishment, relocation of existing infrastructure and environmental impact mitigation. The total capital cost for the Big Hill Enhanced Development Project is estimated at A$19.6 million which includes rehabilitation and end land use amenity consideration. Mine fleet requirements will be pursued through either leasing or dry hire arrangement.
Environmental Bonds will reflect incremental payment at key stages of the project and will also reflect bond reduction on completion of progressive rehabilitative works.
A comprehensive first principle mining cost model was developed to provide a shadow bid estimate and compared to the result of a formal tender process. This undertaking forms the basis of mine operating costs used in the Feasibility Study. Processing costs are based on actual costs as realized at Stawell Gold Mines for the treatment of Big Hill ore types.
At the end of mining operations, re-handling and rehabilitation of the pits and waste dumps will be undertaken. Approximately 3.6 million cubic meters of material will be re-handled back into the pit voids as part of the rehabilitation. This will complete the progressive rehabilitation program of events.
Additional operating cost allowances have been incorporated to reflect the adoption of leading practice mine operations and are estimated to be more than A$10.6 million over the life of the project (see cost details below). These initiatives are in addition to those environmental management initiatives included within capital costs, and are included within operating unit rates presented.
The mineral resource model used in the Feasibility Study is current as at March 2014. Drill spacing over the considered resource area is largely 20m x 25m, with drilling inclusive of additional RC and diamond drilling programs from 2008, 2012 and 2013. The estimate incorporates an updated geological interpretation, update of the resource estimate, review and update of historical void models, utilization of a pit shell (constrained) at A$1,425 gold price and an in situ cut off for reporting of 0.35g/t Au. The Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves.
