Apex begins Wiluna development

Apex Minerals NL is expecting the first gold pour from its Wiluna gold project in Western Australia in November, after the finalisation of a study pegged cash costs at around $A560 per ounce.

The company has today started development of the Wiluna underground mine which is expected to have an initial rate of production of 100,000 ounces per annum.

Costs for the Wiluna mine are forecast at under $A500 per ounce.

Apex said it expects production from to be ramped up to 150,000oz each year soon after production starts at Wiluna, when mining at the Wilsons deposit begins.

The study indicated "robust financial returns with a forecast pre-tax internal rate of return of 36 per cent on an initial three year mine life at Wiluna and Wilsons, at an assumed price of $A900/oz.

Meanwhile power to the site during the current gas crisis will be provided by its diesel power station.

Below is the Apex announcement

Apex Minerals NL is pleased to announce that it has commenced project development at its Wiluna Project in Western Australia after finalising an implementation study which has estimated average cash costs of approximately A$560 per ounce across the group's projects, including the Wiluna and Wilsons ore bodies. Costs for the Wiluna underground mine are forecast at under A$500 per ounce.

Apex expects to achieve an initial production rate of 100,000ozs per annum when production from Wiluna commences, increasing to 150,000 ounces per annum shortly thereafter with the addition of production from Wilsons. Production is forecast to rise further to 200,000 ounces per annum once ore from the Youanmi mine becomes available later next year. Production for the 2009 calendar year is forecast at 150,000 ounces, rising to 200,000 ounces per annum in subsequent years.

The positive study results have validated the Company's integrated mine strategy, which will deliver cost synergies from an expanded production base utilising ore from the Wiluna, Wilsons and Youanmi projects, and have encouraged Apex to accelerate its drill program at Wiluna. As Apex moves into production it will emerge as one of Australia largest domestically listed gold producers at competitive cash costs delivering substantial cash margins.

The study has verified the integrity of the BIOX ® bacterial oxidation plant at Wiluna. It has also confirmed the amenability of processing Wiluna, Wilsons and Youanmi ore types through the Wiluna plant. The study has established reserves from the ore bodies at Wiluna and the nearby Wilsons deposit, from which ore will be trucked to the Wiluna processing plant.

Reserves at Youanmi will be delineated once dewatering and refurbishment of the decline has been completed allowing infill drilling from underground which is anticipated to be during the first half of next calendar year.

The study has indicated robust financial returns with a forecast pre-tax IRR of 36% on an initial 3 year mine life at Wiluna and Wilsons, at an assumed gold price of A$900/oz and a metallurgical recovery of 88%. Financial returns are expected to further improve as more reserves are added through on-going drill programs.

The significant reduction in cash costs from those of previous operators has been achieved by optimising mill throughput, whereby low grade material which previously accounted for a large percentage of the ore feed will be replaced with high grade ore from the Wilsons deposit. Apex's decision to implement owner-mining, rather than contractor mining, has also delivered lower mining costs.

Mining is scheduled to begin at Wiluna underground and East Pit (open pit) in October 2008 with ore being accessed immediately from these two sources. At the same time, decline development will begin at Wilsons, where first ore is expected to be mined in February 2009.

First gold is expected to be poured in November this year with commercial production commencing in the March quarter 2009. At this stage, Youanmi is scheduled to contribute to production in the second half of next year once dewatering and decline refurbishment has been completed.

The study has been completed on the basis that gas supply for its existing 13MW gas power station at Wiluna will be available upon the recommencement of production at the end of 2008 and this gas supply has been secured from Apache through a third party. Apex's gas fired power station is capable of supplying all of the operation's power requirements. Power to the site during the current project development is being provided by the company's diesel power station for the period that gas supplies are suspended. Power generation at Wilsons and Youanmi is planned to be by diesel generation.

The reserve definition at Wiluna is centred on the immediate area surrounding existing underground mine infrastructure at the Woodley and Calais decline. While exploration has so far focussed on these areas to bring the mine back into production, part of the focus will now move to various other areas within the mine environs in order to open up other potential production areas. Within the Gidgee tenements exploration has also been very focussed, in this case on the Wilsons deposit.

Now that the initial mine life is established here, exploration will also move to defining other areas of potential production within the tenement package. This, together with exploration to be carried out at Youanmi will provide additional development opportunities for Apex.