Classic Minerals targets early cash flow from Kat Gap following final government approval to begin mining and processing
Early cash flow from mining and processing at Kat Gap is anticipated within 12 weeks.
Classic Minerals (ASX: CLZ) is targeting early cash flow from its Kat Gap gold operation in Western Australia after receiving the final green light required to undertake mining and processing.
The company announced this morning it had secured the last processing approval from the WA Department of Industry, Mines, Regulation and Safety (DMIRS).
This follows approvals from DMIRS for mining at Kat Gap as well as its mine closure plan, program management plans and native vegetation clearing permit.
With all requisite approvals in place, Classic has mobilised a construction team to the Kat Gap site, which is 170km south of Southern Cross.
Classic chairman John Lester said the company was now poised to begin full-scale mining and processing at Kat Gap using its own facilities.
The construction team will reassemble the Gekko plant onsite after it had been taken apart prior to transport.
Extensive test work on Kat Gap bulk samples were undertaken using the Gekko plant in Perth, which “outperformed expectations”.
Pilot test work involved processing Kat Gap ore at 10 tonnes per hour, and once it is reassembled at the project site, it is upgradable to 100tph capacity.
Path to first cash flow
“The new plant will process gold ore from the company’s Kat Gap mine, generating approximately 10 construction and 50 ongoing jobs in the region,” Mr Lester noted.
He added the company’s Gekko plant will be the only other gold processing facility in the region apart from the Marvel Loch gold mine.
Initial processing on site will use a 6,500t bulk sample from the project with an average head grade of 6 grams per tonne gold.
Data from this will be used to refine the company’s financial modelling, mine plan, processing plant and pit designs.
The processed gold dore will be refined at the Perth Mint, which Classic anticipates will begin generating early cash flow within 12 weeks.
A key agreement in the September quarter was inked with Goldvalley, which is providing Classic with $10 million in non-recourse funding to enable mining and processing of an initial 100,000t of ore. Goldvalley will be repaid by receiving 30% of the profits from gold sales. The funding loan is expected to be paid off by late 2024.
Mr Lester said the Goldvalley agreement afforded the company with a low capex pathway forward while retaining a solid proportion of the profits and avoiding dilution.