Youanmi scoping study shows high returns, low costs for Venus Metals and Rox Resources
The scoping study estimates cumulative EBITDA for the Youanmi gold project would reach about $577 million over an initial eight year mine life.
A scoping study for the Youanmi gold project near Mt Magnet in Western Australia has indicated the potential for high returns with low capital and operating costs against industry benchmarks for joint venture partners Venus Metals Corporation (ASX: VMC) and Rox Resources (ASX: RXL).
The study follows a substantial upgrade to the Youanmi underground resource in January, and a subsequent increase to the near surface resource in April.
It aims to establish the economics and likely development scenarios for the project-wide resource estimate which currently sits at 27.9 million tonnes at 3.57 grams per tonne gold for 3.2 million ounces of contained gold.
Annual gold production
Scoping work was based on an average annual gold production target of approximately 71,000oz with average head grade of 5g/t for a total production target of 569,000oz over an eight-year mine life.
The development would have a total pre-production capital expenditure, working capital and assumed financing charges of approximately $134 million with an all-in sustaining cost (AISC) average of approximately $1,538/oz.
Development costs would be spread over constructing a 480,000t per annum processing plant and site infrastructure ($99 million); working capital and other costs ($35 million); and capital intensity of approximately $1,386/oz based on the average annual production target given high margin production target and long-life cash flows.
Initial cashflow
The combination of gold-in-concentrate and carbon-in-leach (CIL) bullion production has been considered the optimum commercialisation strategy to generate initial cash flow.
The scoping study predicted a cumulative EBITDA (earnings before interest, taxation, depreciation and amortisation) of approximately $577 million over the life of the project, with a pre-tax undiscounted free cash flow of $418 million and pre-tax and unleveraged net present value of $303 million.
The internal rate of return has been estimated at 45% (pre-tax) and the project is expected to have a payback of three years from first production.
Profitable long-life asset
Rox managing director Alex Passmore said the scoping study highlights Youanmi’s potential as a profitable long-life asset.
“We have not been exempt from this high-cost inflationary environment, and have chosen to prioritise high-grade, low-cost ounces through the production target of gold-in-concentrate as the preferred method of commercialisation for this project,” he said.
“We intend to continue converting inferred resources to the indicated category, while adding ounces through ongoing resource expansion and regional exploration drilling.”
Sulphide material
Mr Passmore said the mining and processing of sulphide material from underground operations between 1994 and 1997 at Youanmi have been integral to the scoping study.
“The existing decline will be rehabilitated and provide an early platform for development and accessing high grade material,” he said.
“The previous operation produced a concentrate as an intermediate step in the process plant the data from this production phase along with our own testwork indicates that marketable gold concentrates can be produced from the Youanmi sulphide material.”