Doray Minerals eyes 30% boost in gold output from Deflector

Doray Minerals (ASX: DRM) is anticipating a 30% boost in gold production from its Deflector gold and copper project, according to its 2019 fiscal year production guidance.

The miner today announced the guidance, which forecasts an annual gold output of around 80,000 ounces to 85,000oz from the Western Australian project.

Doray is also expecting lower production costs, calculating an all-in-sustaining cost of between A$1,050 and A$1,150 per ounce, which is about A$200 cheaper than the current 2018 financial year costs.

Not only is this forecast production materially higher than was contemplated in the Deflector project’s current life-of-mine plan, it also does not include any potential additional production from the recent Da Vinci discovery, which is currently under evaluation.

“The roll-on impact of this production forecast is the generation of significant free cash flow, which will accommodate an increase in exploration investment to A$10 million at Deflector, whilst continuing to increase the company’s net cash position,” Doray stated.

This A$10 million exploration budget represents a 67% higher commitment at the Deflector project than in fiscal 2018, reflecting the upscaling of the project due to the recent high-grade discoveries.

Doray is projecting copper production to reach 2,250t to 2,750t for the 2019 financial year, which is in line with current output.

Deflector gold and copper project

The Deflector gold and copper project is located in the southern Murchison region of WA, about 160km east of the regional city of Geraldton.

First gold production began via open pit mining in May 2016 before progressing to solely underground mining in February 2017.

In January 2018, an infill drilling program confirmed high-grade results including a whopping 260 grams per tonne gold intersection at the Da Vinci deposit within the project.

Since then, further discoveries were made including a new lode located south of the Deflector mineral resource area, and more high-grade results from a second stage infill drilling program at Da Vinci.

Doray managing director Leigh Junk has described the project as a “high-quality operation delivering impressive results”.

“I give credit to the operation’s teams who have not only discovered substantial additional high-grade ore during the 2018 financial year, but also incorporated it into the mining and processing plans for the coming year,” he said.

Mr Junk said the 2019 production guidance, combined with the additional exploration commitment, sets the Deflector project up to achieve “sustainable annual production of 100,000oz of gold with a mine life greater than five years”.

Doray shares rose 5.17% to A$0.305 by afternoon trade. The company’s share price has been on a steady rise since January, when it announced the massive 260g/t gold intersection at Da Vinci.