Black Dragon Gold boosts production forecasts at Salave with updated scoping study

Black Dragon Gold (ASX: BDG) has released a robust updated scoping study for its promising Salave gold project in Spain.

The reworked study estimates Salave can generate an after-tax net present value of approximately $806 million (US$506m) and a 34% internal rate of return at a conservative assumed gold price of US$2,106 per ounce.

The new results have also boosted the average forecast annual production numbers to 99,462oz in concentrate at an average grade of 59.7 grams per tonne gold and a recovery-to-concentrate rate of 97%.

Major European project

The project, one of the largest undeveloped gold projects in Europe, has a measured mineral resource of 1.03Mt grading 5.59g/t gold, containing 0.19Moz of gold.

The company believes the study results further strengthen the case for favourable assessment of Salave as a “Strategic Investment” project by the local Asturias Government in Spain.

It also sees the project delivering economic and social benefits to the region.

Financial improvements

Executive chair Dominic Roberts said the study demonstrates robust economics for an underground mining operation with a 14-year mine life plus two years of pre-production development and concurrent closure.

This includes considerable improvements in nearly all financial and production metrics with minimal impact on project development and sustaining costs.

“By paying particular focus to the engineering aspects of the study, a more efficient and effective mining solution is considered—one that extends the life of mine, before any potential resource expansion is realised, to over 14 years,” Mr Roberts said.

Potential financiers

Black Dragon is confident the success of the scoping study will reassure potential financiers.

“The Salave gold project has robust economic metrics, a long life of mine, low operating costs, a discrete project footprint, very well-conceived environmental management outcomes and is financeable,” Mr Roberts said.

“The updated capital costs are wholly realistic, having been benchmarked against recent contemporary European operations.”

“The potential impact of support for the project by the principality of Asturias cannot be understated and will enable the hugely positive impact of this project to be realised.”

Significant exploration upside

The company has identified the potential for resource extension both at depth and along strike through further exploration drilling.

Mr Roberts said that, with the company considering it ready for pre-feasibility level studies, it has identified a milestone schedule for the project.

This includes sampling and test programs in May and the commencement of a JORC-compliant pre-feasibility study later this year.