Various mining and processing options were considered with the final selection (Base Case) presented in this table.
Study relates to only
55%
of JORC resources =
substantial further upside potential exists
Forecast cashflow
(after Initial Capital Investment) =
$81M
Forecast Net cash return (including Initial Capital Investment) =
$69M
Plans provide for a Central Processing Plant to treat ores from the district.
Any additional open cut resources can add substantially to the Profitability and Mine Life.
Initial capital investment of
$11.9M
Plus Working Capital (approximately $4-5M)
In October 2022, the Company completed its Scoping Study for the Adelong Gold Project. The study is now based on mining the Challenger, Caledonian and Currajong deposits which are predominantly (55%) Measured and Indicated Resources.
This Scoping Study demonstrates a viable project, not only for the Challenger Deposit but also for open cut mining on the Currajong and Caledonian deposits. The Company is now focused on progressing development of these deposits whilst it embarks on a program of exploration and undertakes additional resource drilling to expand the resource base and extend the mine life.
For more in-depth information, please refer to ASX Announcement 31 October 2022:
Summary
In November 2021 the Company announced the details of its Initial Scoping Study based solely on production from the Challenger and Currajong orebodies. A program of drilling was later undertaken to upgrade the Inferred Resources at the Caledonian deposit in order to incorporate production from that resource into the Scoping Study.
The JORC Resource Report for the revised JORC Resource Estimates for the Caledonian Deposit can be found in Appendix 1: Adelong Gold Project Caledonian Deposit September 2022 JORC (2012 Edition) Gold Resource Estimate.
It shows:
Revised JORC Resource Estimates for Caledonian Deposit
CALEDONIAN deposit |
Tonnes |
Au |
Au |
|
Measured |
- |
- |
- |
- |
Indicated |
57% |
127,000 |
3.90 |
15,900 |
Inferred |
43% |
123,000 |
3.04 |
12,100 |
Total |
100% |
250,000 |
3.48 |
28,000 |
Combined with other deposits that form the Adelong Gold Project this brings the total project resource to 1,550,000t @3.41g/tAu (169,700oz):
Resources Statement (JORC 2012) for the Adelong Gold Project based on 1g/tAu Cut-off
CHALLENGER deposit |
Tonnes |
Au |
Au |
|
Measured |
60% |
357,000 |
4.17 |
47,900 |
Indicated |
23% |
163,000 |
3.50 |
18,300 |
Inferred |
17% |
144,000 |
3.07 |
14,100 |
Total |
100% |
663,000 |
3.77 |
80,300 |
CURRAJONG deposit |
Tonnes |
Au |
Au |
|
Measured |
- |
- |
- |
- |
Indicated |
22% |
126,000 |
2.57 |
10,400 |
Inferred |
78% |
407,000 |
2.63 |
34,400 |
Total |
100% |
533,000 |
2.61 |
44,800 |
DONKEY HILL deposit |
Tonnes |
Au |
Au |
|
Measured |
- |
- |
- |
- |
Indicated |
- |
- |
- |
- |
Inferred |
100% |
103,000 |
5.03 |
16,600 |
Total |
100% |
103,000 |
5.03 |
16,600 |
CALEDONIAN deposit |
Tonnes |
Au |
Au |
|
Measured |
- |
- |
- |
- |
Indicated |
57% |
127,000 |
3.90 |
15,900 |
Inferred |
43% |
123,000 |
3.04 |
12,100 |
Total |
100% |
250,000 |
3.48 |
28,000 |
TOTAL ADELONG GOLD PROJECT RESOURCES |
Tonnes |
Au |
Au |
|
Measured |
25% |
357,000 |
4.17 |
47,900 |
Indicated |
20% |
416,000 |
3.33 |
44,600 |
Inferred |
55% |
777,000 |
3.09 |
77,200 |
Total |
100% |
1,550,000 |
3.41 |
169,700 |
See ASX releases: 29 September 2021, 5 October 2021 and 31 October 2022 for details.
On the basis of these upgraded resource estimates for Caledonian, a pit optimisation study was carried out to look at what component of the Caledonian resource that could be commercially extracted via an open cut. This has added a further 79,000t @ 5.76g/t Au (14,630oz) to the Production Targets used in the Initial Scoping Study. Around 77% of this Production Target from Caledonian came from Indicated Resources.
Production Targets used in the Scoping Study
Production Targets |
Tonnes (t) |
Grade |
Contained Gold (oz) |
Measured Resources |
Indicated Resources |
Inferred Resources |
Challenger Open Cut |
372,397 |
3.79 |
45,426 |
78% |
17% |
5% |
Challenger Underground |
74,782 |
3.59 |
8,639 |
60% |
40% |
|
Caledonian Open Cut |
79,000 |
5.76 |
14,630 |
|
77% |
23% |
Currajong Open Cut |
262,141 |
2.27 |
19,153 |
|
69% |
31% |
Total Treated |
788,320t |
3.47g/tAu |
87,818oz |
43% |
40% |
17% |
With the addition of Production Targets for the Caledonian deposit the Scoping Study was rerun to assess the additional value added by the inclusion of the Caledonian deposit. This has demonstrated a potential increased financial return (before tax) of around $17.5M to those outlined in the Initial Scoping Study. The total project returns are tabulated below:
Summary of the Financial Analysis
(Based on A$2,650oz)
SCOPING STUDY SUMMARY |
|
Initial Capital Costs ($M)(Excludes Working Capital) |
$11.88 |
Mine Life |
5 Years |
Gold Production (gold oz) |
81,0822 |
Cash Flow (A$M) |
|
Revenue ($M) |
$213.79 |
OPEX ($M) |
$124.49 |
Production CAPEX ($M) |
$8.38 |
PRODUCTION CASHFLOW (Before Tax)($M) |
$81.06 |
Initial Capital Costs ($M)(Excludes Working Capital) |
$11.88 |
NET CASH FLOW(Before Tax) ($M) |
$69.18M |
IRR % (Before Tax) |
72% |
NPV (5%) Before Tax ($M) |
$53.56M |
1 – The Company confirms it is not aware of any new information or data that materially affects the information included in the relevant market announcement and, in the case of estimates of mineral resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed
2 – Approximately 17% of the resources used in this Production Target are in the Inferred Mineral Resource category. As there is a low level of geological confidence associated with Inferred Mineral Resources, there is no certainty that further exploration work will result in the determination of further Measured or Indicated Mineral Resources or that the Production Target or preliminary economic assessment will be realised
Future Plans
The Scoping Study provides a solid commercial foundation for the project with ample scope to expand on these resources with additional drilling or in regional acquisitions. The Study has demonstrated a commercial project exists based solely on the Challenger, Caledonian and Currajong deposits and a basis for proceeding to production.
The Study has shown that open cut resources can add substantially to the bottom line and so the longer term focus will be to explore targets that can add to the mine life and economic returns.
Consideration will also be given to expanding these resources by corporate acquisitions as the immediate region has no gold processing plants operating in a 150km radius and the close proximity of the Adelong Plant to the Snowy Mountain Hwy (1.5km) which allows 40t trucks, would allow low cost transport of ore from this region.
Longer term, the Company intends to move the project into a second stage operation being underground mining and several of the resources have grades that would potentially warrant underground mining.
