Describing itself as “Australia’s next gold producer”, Bardoc Gold’s (ASX: BDC) cash flow optimisation study for its namesake project in Western Australia has confirmed the viability of company’s plan to bring-forward production from the larger high-grade Aphrodite deposit.
The study evaluated Bardoc’s new strategy to bring forward production from Aphrodite, which will require more initial capital expenditure of $232.4 million compared to the $177.4 million outlined in the definitive feasibility study that was published in March.
This higher capital expenditure also includes rising input costs, a $23 million contingency, and the additional $20.7 million for upfront construction of the flotation plant in year one, which would enable processing of the higher-grade ore from Aphrodite.
Development of the flotation plant had originally been delayed to year two.
Becoming a mid-tier gold producer
Despite the higher initial outlay, the study found bringing forward production from Aphrodite would increase total output in the first five years by 80,000 ounces of gold.
Bardoc chief executive officer Robert Ryan noted the higher output would also propel Bardoc into mid-tier producer status sooner with more than 150,000oz of gold per annum expected by year three.
“The plan also de-risks the project by bringing forward the capital expenditure for the flotation circuit and increasing gold production by 80,000oz in the first five years,” he added.
It is expected the increased cash flow from higher output will improve Bardoc’s debt repayment profile and return value to shareholders sooner.
Mr Ryan said the company’s higher cash flow will continue into the future with potential extensions to the proposed Aphrodite and the Zoroastrian underground mines where mineralisation remains open.
Bardoc gold project
Bardoc encompasses 250 square kilometres of tenements about 40km north of Kalgoorlie and is close to road, rail, power and a residential workforce.
The project hosts 3.07Moz in resources and 1.1Moz in reserves.
Over an initial six-and-a-half years, Bardoc expects to produce 660,000oz of gold from open pit and underground operations at Aphrodite.
At the Zoroastrian/Excelsior complex, production of 419,000oz is anticipated from open pit and underground scenarios.
All-up, the initial mine life for Bardoc is nine years to generate 1.1Moz of gold.
All in sustaining costs have been estimated at $1,301/oz – up marginally on the definitive feasibility study due to higher input and labour costs.
Based on an Australian dollar gold price of $2,250/oz, the optimisation study forecasts project cash flow of $592/oz, with this anticipated to increase in line with a rising price.
At a gold price of $2,550/oz, cash flow of $869/oz has been predicted.
A final investment decision for Bardoc is expected in the current quarter, with the company reporting financing discussions were “well advanced” and funding anticipated to be secured in the December quarter.
Site infrastructure construction is pencilled in to begin before the end of the year, with first gold scheduled for the March quarter of 2023.