Auric targets $5.3m cashflow from WA Munda gold starter pit

Auric Mining has revealed a master plan to toll treat and produce 6100 ounces of gold from a starter pit at its Munda gold deposit near Widgiemooltha in Western Australia to generate a quick $5.3 million in free cash.

Based on toll treating a reserve of 125,000 tonnes grading 1.8 grams per tonne (g/t), the company expects to improve its understanding of the bigger orebody and bank some quick cash as it looks to ramp up the toll treating operation sequentially.

By proceeding with a staged mining development plan, the starter pit kills a few birds with one stone and also puts some money in the tin for the expected broader mining campaign at Munda.

By removing the costly overburden at a time of high gold prices, future mining costs should become relatively cheaper, setting up the longer-term full-scale project to become more resilient against volatile gold prices.

The initial phase of mining will also offer valuable insights into the bigger deposit, allowing Auric to fine-tune its plans ahead of full-scale production, which is slated to commence in 2026.

Auric’s recent prefeasibility study (PFS) on the project used a 10m by 10m spaced drilling program to define the initial 125,000t reserve for 7400 ounces - or 6100 ounces after accounting for recoverability.

The company has forecast a five-month operational timeline for the initial mining operation that should churn out undiscounted cashflows over that period of $5.3m based on a gold price of $3500 per ounce and an all-in sustaining cost (AISC) of $2635 per ounce.

With a pre-strip ratio of 7.6:1, the starter pit was designed as a conventional open-pit, drill-and-blast mining operation and will kick off by first removing 339,000 cubic metres of overburden.

Then 125,000t of ore will be mined before being trucked and toll treated offsite at a third-party mill, 95km from the site.

Using a standard carbon-in-leach process, Auric has forecast a conservative average recovery rate of 83 per cent.

Financial modelling is targeting an initial capital and working capital drawdown of $4.86m that Auric says it will pay down from operational profits before ending the campaign with the $5.3m in free cash.

Should toll treatment be delayed at any time, thereby restricting cashflow from gold sales, the company has forecast a further $1.8m of working capital may be required to maintain the project’s financial integrity.

The $650,000 infrastructure cost of haul roads, site offices and environmental management systems have also been included in the $4.86m initial cash outlay.

With $4.3m in the bank at the end of September and a big payday due shortly from completing mining operations at the company’s Jeffreys Find mine near Norseman, Auric should be well placed to cover the initial working capital requirements without having to rely on any additional funding.

This work is another key part of the process in mining Munda. We have a lot of confidence in our approach and the key inputs that have been used. The starter pit is designed to provide a better understanding of the deposit before aiming to go into full production in 2026.

According to the company, its sensitivity analysis highlighted the project’s exposure to gold prices as the primary driver of the mine’s profitability, followed by processing and mining costs.

It also emphasised its resilience, being able to turn a profit even if the gold price declined 25 per cent from current levels.

Given the proposed starter pit overlaps an existing pit on a current mining lease, the company believes pending approvals for vegetation clearing and additional permits will proceed smoothly, allowing it to proceed with mining in the new year.

Auric is wasting no time with its plans to move into full-time mining operations at Munda now that Jeffreys Find is winding up and it has one eye on the larger production scenario at Munda post the starter pit.

In the current high gold price environment and with a mineral resource of 3.65 million tonnes at 1.23g/t gold for 145,000 ounces, it’s perhaps not surprising Auric sees Munda as a prize definitely worth chasing.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au