Updated PFS for Reward gold mine highlights an 18% increase in NPV and a 43% increase in IRR
Pre-production capex now estimated at just $17m with mine restart expected to generate pre-tax free cash flow of $41m
Vertex Minerals says these economics can be further enhanced with more inferred resources being converted to the higher confidence indicated category
Special Report: Vertex Minerals’ updated pre-feasibility study for the Reward gold mine development in New South Wales has revealed significantly improved economics thanks to its recent acquisition of the Gekko processing plant.
The company acquired the Gekko plant from the Morningstar gold mine in Victoria for just $620,000 plus GST, after raising $800,000 via a placement to fund the purchase.
Vertex Minerals (ASX:VTX) will move the plant to the Hill East project where it is expected to slot right next door to the existing mining infrastructure at its flagship Reward gold mine which hosts an extremely high-grade resource of 419,000t @ 16.72g/t – or 225,200oz of contained gold.
Higher confidence indicated resources make up 141,000t @ 15.54g/t, or 70,500oz of contained gold, of this inventory.
An engineering study from Gekko Systems already flagged the plant would likely lower capex, reduce build time and enable early cash flows by processing stockpiled material.
It will also reduce water demand from 35m3/h to 10m3/h and installed power from 688kW to 365kW.
Adding interest, the plant is ideally suited to the free milling, high-grade Reward ore, with expected gold recoveries of 92%.
On site workers in Amalgamated Adit (640 Level), main access for the Reward gold mine. Pic via VTX
Updated PFS provide robust base for future growth
The updated PFS has now proved the value of acquiring the Gekko plant, delivering an 18% increase in net present value (NPV), 43% increase in internal rate of return (IRR), 15% increase in free cash flow, a 40% reduction in pre-production capex and a reduction in the payback period by six months.
Reward is now expected to cost $17 million and generate $150 million in revenue with all-in sustaining costs of about $1,833/oz.
This will deliver pre-tax NPV of $33.3 million and IRR of 110% with $41 million in free cash flow.
It will produce 49,890oz of gold over the initial two-year mine life.
Plan view of the tenements and long section showing the key locations. The PFS mining will be within the Reward Resource envelope. Pic via VTX
Financials can be improved further by the conversion of inferred resources into indicated resources through more drilling.
“Given the recent acquisition of the Morningstar gravity gold plant we are pleased to have completed an updated pre-feasibility study for the Reward gold mine, which lowers capex and the payback time and increases cash flow, NPV and IRR,” VTX executive chairman Roger Jackson said.
“The PFS only represents two years of processing, however, we believe we can build our high-grade gold inventory whilst mining, to add to this mine life.”
Jackson added the VTX board maintains its view the most commercially prudent way to develop the mine is to base it on indicated resources defined to date before carrying out further underground drilling alongside mining activities to deliver further resource growth which will in turn deliver cost and logistical benefits.
“Pleasingly, the numbers outlined in this updated PFS already demonstrate the strong projected economics of the Reward gold mine based on the existing Indicated resource, notwithstanding the clear potential for further significant resource upgrades as mining operations get underway, as we have high grade exploration targets sitting alongside and below the mining envelope,” Jackson says.
“Further, Reward will be one of Australia’s most environmental and sustainable gold mines.
“We expect that the use of cyanide and other chemicals is not required for ore processing. We plan to recycle and re-use our water. We plan to dry stack the sand residue from processed ore and our plant design has very low energy requirements.”
This article was developed in collaboration with Vertex Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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