Astral Resources releases positive scoping study for Mandilla gold project

Astral Resources (ASX: AAR) has released a positive scoping study for the potential development of its flagship Mandilla gold project in Western Australia.

The study is based on a projected average annual production target of 100,000 ounces at an average feed grade of 1.30 grams per tonne gold over the first 7.4-years of an 11-year life-of-mine (LoM).

This will reduce to 41,000 ounces per annum at 0.5g/t when treating lower-grade stockpiles over the mine’s remaining 3.4 years.

Approximately 80% of the materials scheduled for extraction in the first three years are classified as indicated, with the balance classified as inferred.

Over the LoM, approximately 70% of the production target is categorised as indicated, with the remaining 30% inferred.

Astral said the inferred mineralisation would be targeted as late as possible in the production schedule.

Compelling financials

Compelling financials using a $2750/oz gold price include free cash flow of $740 million, a net present value of $442 million, a 73% internal rate of return and a payback period of nine months.

The scoping study is based on mineral resources defined at Mandilla only.

Further upside is expected from ongoing exploration around the deposit and at the nearby Feysville gold project to secure a potential source of future satellite ore.

Optimum strategy

The Mandilla operation will employ a 2.5 million tonnes per annum carbon-in-leach (CIL) processing plant and associated infrastructure as the optimum commercialisation strategy.

It is reported to provide the lowest capital and operating cost across the mine’s operating life.

Astral expects a LoM payable metal production target of 845,000 ounces at an all-in sustaining cost (AISC) of approximately $1648 per ounce.

Total estimated pre-production capital of approximately $191 million includes $123 million for the processing plant and non-processing infrastructure; and $68 million for pre-production mining and general and administrative costs.

Highly profitable operation

Managing director Marc Ducler said the study had confirmed the potential for Mandilla to become a highly profitable, standalone gold operation.

“Mandilla is firmly established as one of the best free-milling, open pit resources in the goldfields district in terms of scale and quality,” he said.

“This study outlines compelling financial metrics for the development using a gold price assumption which is lower than the spot price has been for the past six months and a five-stage open pit design.”