- 01Lady Herial pit done ahead of schedule.
- 02303k t at 1.68 g/t; 14,910 oz; 91% recovery.
- 03$39m pre-tax FCF on invoices.
- 04MRE: 589k t @2 g/t; forecast aligned.
Lunnon Metals (ASX: LM8) has completed operations at the Lady Herial open pit gold mine within the Kambalda gold and nickel project in Western Australia, ahead of the project’s feasibility study schedule.
The company recorded total production from the pit of 303,437 tonnes grading 1.68 grams per tonne for 14,910 ounces sold at 91% metallurgical recovery.
Operating costs for 19,616t of ore mined in August at 2.19g/t gold for 1,382oz have been tallied and a final invoice for $1.2 million sent to St Ives Gold Mining — a wholly owned subsidiary of major Lunnon shareholder Gold Fields — under the terms of an ore purchase agreement signed last September.
St Ives was also charged $5.1m for the delivery of 1,258oz gold (at 91% recovery).
On payment of the final invoices, Lady Herial will have generated approximately $39m in free cash flow for Lunnon, on a pre-tax and unaudited basis.
Feasibility Study Alignment
Lunnon has completed a reconciliation against the Lady Herial feasibility study, highlighting close alignment with January forecasts in the areas of revenue, gold content and unit costs.
Mining produced 13% more tonnes, due to occasional dilution and minor additional ore blocks, dropping grades 11% lower than expected.
Total operating costs were 5.1% higher than forecast, resulting in free cash flow within 3.5% of the study estimate.
The new MRE sits at 589,000t grading 2g/t gold for 37,000oz gold, including 110,000t at 2g/t for 7,000oz (Measured), 289,000t at 1.9g/t for 17,500oz (Indicated) and 190,000t at 2.1g/t for 12,600oz (Inferred).
Early Cash Flow Opportunity
Designed to provide Lunnon with an early cash flow opportunity from the Lady Herial deposit, the ore purchase agreement followed the release of a scoping study that found
the deposit was in a strong position to exploit the high gold price environment and concluded that Lunnon could generate between 210,000t gold at 2g/t and 355,000t at 1.8g/t from Lady Herial, yielding between 12,900oz and 19,700oz recovered gold.
It also forecast a pre-tax free cash flow of $44.7m at a gold price of $5,000 per ounce, with an all-in-cost of approximately $2,100/oz of gold produced.
Lunnon said the final open-pit void had been used to cut and deplete the Lady Herial resource by 200,000t at 2.7g/t gold for 17,100oz.
A total 715oz were depleted but not delivered to St Ives under the ore purchase agreement, representing a very minor number of narrow blocks that did not remain at more than 0.5g/t gold when diluted in any flinch design.
Get the wire before the market opens.
The ASX small-cap stories that matter, filed before 9am AEST. Curated by the Small Caps desk.