The company has initiated a strategic review of its development strategy for 3.07Moz namesake gold project amid rising costs
Bardoc originally planned to make FID on the project at the end of 2021. (Credit: Erik Stein from Pixabay)
Australian mining company Bardoc Gold has deferred a final investment decision (FID) on 3.07Moz namesake gold project, located in Western Australia.
The company originally planned to make FID on the project at the end of 2021.
Bardoc has now initiated a strategic review of its development strategy for the gold project in the wake of the rapidly rising cost environment in the region, tightening labour market and other Covid-19 related challenges faced by new projects.
According to a definitive feasibility study conducted in March this year, a pre-production capital cost for the project was estimated at A$177m ($128.6m).
The review considered the increase in cost by A$55m or 31% to A$232m outlined in the cash-flow optimisation study in September this year.
Bardoc has also received indications from key suppliers and contractors that cost pressures for new resources projects would worsen over the coming 12 to 18 months, due to increasing steel, materials and input costs.
Also, the shortage of skilled personnel, services and equipment, has been aggravated by Covid-19 related border closures and restrictions on people and equipment.
Bardoc Gold Chairman Tony Leibowitz said: “The decision to undertake this strategic review is a necessary and pragmatic decision which we firmly believe will ultimately deliver positive outcomes for our shareholders.
“It has become increasingly clear that the rising cost environment across the WA resource sector has made this a very challenging time for any company to launch a significant new mine development.
Bardoc’s gold project is located 40km north of the Kalgoorlie, in the Eastern Goldfields, with four main deposits and numerous small projects, covering 250km2 area.
It features a large resource base within the prolific Norseman-Wiluna greenstone belt and junction of the Bardoc Tectonic Zone (BTZ) and the Black Flag Fault (BFF).
The two deep-seated crustal structures are said to host several multi-million-ounce deposits, including the Golden Mile in Kalgoorlie.
Its review is expected to consider strategic M&A and consolidation opportunities, along with other means to monetise the deposit in the near term.
The board has also decided to end expenditure on pre-development and project financing activities.
In the short term, Bardoc intends to focus on the ongoing resource expansion drilling programme at the cornerstone Zoroastrian Deposit.
Leibowitz added: “The Board is not prepared to expose our shareholders to this level of risk at a very challenging time in the resources cycle, and we are certainly not willing to take on significant amounts of debt and potentially blow our capital structure out to develop a project
“All of that said, we have a unique and highly valuable asset in the Bardoc Gold Project with a Resource of over 3 million ounces, 1 million ounce Reserve, a premium location on the doorstep of Kalgoorlie and exceptional exploration upside which remains to be unlocked.
“Our focus as a Board over the next few months will be to continue exploration to grow our Resource and Reserve base while pursuing strategies to crystallise the value of our asset base for shareholders.”