Egan Street Resources (ASX: EGA) has expanded the gold resource at its advanced Rothsay project in Western Australia to almost half a million ounces after firming up an additional 53,000oz.
The new resource now totals 1.54 million tonnes at 9.2 grams per tonne gold for the 454,000oz and represents a 13% increase.
According to Egan Street, infill and extensional drilling that was carried out over shallow extensions to the Woodley’s Lode contributed to the boost in resources.
“This latest increase in resources paves the way for further growth in production and free cash flow at Rothsay,” Egan Street managing director Marc Ducler said.
He added the discovery cost equated to $30 per ounce, with the company’s discovery costs averaging about $35/oz since it listed on the ASX two years ago.
“The consistency of these metrics provides further confidence that the Rothsay gold project will deliver value well beyond our initial production target published in July 2018,” he said.
Rothsay definitive feasibility study
The July definitive feasibility study’s economics for Rothsay were based on a $1,700/oz gold price and processing 1.2Mt at 6.94g/t gold to generate 250,000oz.
Meanwhile, the study predicts 250,000oz gold production over six-and-a-half years to generate pre-tax cash flow of $100 million from $414 million in revenues.
Egan Street is targeting first gold production by the end of 2019, with capital expenditure estimated at $36.1 million.
Emerging gold producer
While Egan Street is negotiating final debt funding arrangements to produce its first gold by the end of next year at Rothsay, exploration is ongoing to de-risk the project further.
Earlier this month, Egan Street reported it had unearthed bonanza gold hits grading up to 776g/t from a 16-hole diamond drilling program that targeted the southern extensions to the Woodley’s and Woodley’s East shears.
Notable intersections were 2m at 116.9g/t gold, with 0.3m grading 776g/t gold; 2.63m at 57.2g/t gold including 0.5m at 216g/t gold and 0.48m at 66.3g/t gold.
“We are also about to commence a major new 5,000m reverse circulation drilling program targeting mineralisation beneath the historical Orient open pit, where we believe there is excellent potential to define additional mineralised positions,” Mr Ducler said.
A further resource upgrade is anticipated for early next year, while today’s update will be incorporated into a revised mine design and schedule.
Egan Street plans to begin construction of its processing plant in the first quarter of next year, with Mr Ducler saying last month the company was “confident of securing an attractive funding package” to finance the construction.