Astral Resources unveils promising economic outlook for Mandilla gold project

Astral Resources (ASX: AAR) managing director Marc Ducler says the economics for the Mandilla gold project in Western Australia have improved since a scoping study was released last year.

Mandilla sits just 70km south of Kalgoorlie in Western Australia’s Goldfields.

Mr Ducler told last week’s Resources Rising Stars Summer Series in Brisbane that Astral was the only junior with a joint ore reserves committe resource base of more than 1 million ounces of gold within striking distance of Kalgoorlie.

“Plus-1 million ounce deposits near Kalgoorlie are becoming more and more difficult to find,” he said.

“And something that is incredibly difficult to find invariably becomes very valuable over time.”

The Mandilla resource estimate is 37 million tonnes at 1.1 gram per tonne gold for 1.27Moz of gold, 81% of which is contained within the Theia deposit.

Theia is proposed to be a single open pit, underpinning a future Mandilla development.

Promising metrics

The scoping study envisaged a 2.5Mtpa operation to produce 100,000oz of gold per annum over the first 7.4 years.

Total production was forecast at 845,000oz over 10.4 years at all-in sustaining costs of A$1,643/oz. Capital costs were estimated at A$123m.

Using a gold price of A$2,750/oz and an 8% discount rate, the study – which Mr Ducler said was done largely to prefeasibility study levels – returned an unleveraged, pre-tax net present value (NPV) of A$442m and internal rate of return (IRR) of 73%.

Life-of-mine free cashflow is forecast at A$740m, while the payback period is estimated to be just 0.75 years.

The Australian dollar gold price is today sitting at more than $3,100/oz.

Using a $3,000/oz gold price, the NPV improves to $579m with an IRR of 92% and payback period of just 0.67 years.

At that higher gold price, life-of-mine free cashflow is forecast at $946m.

“There are no peers in our region that have the development opportunity that Mandilla presents,” Mr Ducler said.

To assist with development, Astral recently appointed well-known mine-builder and deal-maker Mark Connelly as company chair.

“We are a company that won’t stand still,” Mr Ducler said.

Exploration upside

There remains further potential to grow the resource at Mandilla, as evidenced by recent results from the Kamperman prospect.

Astral drilled 13 holes in 2023 with best results including 4m at 94.84g/t gold, 13m at 9.06g/t gold, 21m at 4.16g/t gold and 10m at 4.57g/t gold.

More recently, a 495m diamond drill program returned 3.7m at 12.2g/t gold and 1.3m at 9.21g/t gold.

“Our strike rate at Kamperman is exceptional,” Mr Ducler said. “Kamperman is demonstrating there’s some stunning grades here.”

A 2,500m reverse circulation drilling program will begin at Kamperman this month.