Calidus nears steady-state production at WA gold play

ASX-listed Calidus Resources is moving fast towards steady-state production at its Warrawoona gold project in WA’s Pilbara region after pouring 8916 ounces of gold in the June quarter. The company tabled its impressive results just six weeks after pouring the first batch of gold from its carbon-in-leach, or “CIL” circuit at its newly commissioned processing plant.

CIL is an extraction technique widely used in the mining industry to separate gold from waste material at a beneficiation plant and ultimately deliver ore with higher grades.

Management says it has another 1192 ounces of gold in circuit and over the quarter it has pocketed about $22 million from gold sales.

According to Calidus, milling rates also marched forward over the June sector and are now likely to touch 2.4 million tonnes per annum by the end of the month.

The company says it has milled a total of 327,000 tonnes of low-grade ore, run-of-mine and commissioning ore over the period.

Calidus has been on something of a mining frenzy in recent weeks, shovelling about 20,000 bank cubic metres, or “BCM” of dirt a day – more than 1000 BCM above its average daily requirement. The company says it has plans to bring in an additional excavator and more operators to Warrawoona to ensure its BCM statistics hold firm.

The Perth-based company became one of the Pilbara’s newest gold producers in May this year after its first gold pour at Warrawoona, joining the likes of De Grey Mining, Novo Resources Corporation and Kairos Minerals taking part in something of a modern-day gold rush in the Pilbara.

The area's prospectivity has in many ways been driven by De Grey’s world-class Hemi discovery that highlighted the economic potential of the ground’s gold sanukitoid intrusions.

After the discovery about two years ago, De Grey’s share price soared from about 4 cents to a high of about $1.60 in September 2020.

Calidus’ road to production started about five years ago when the company lost its biotech facade and re-emerged as a gold explorer, determined to develop its current resource base of 410,000 ounces grading 2.2 grams per tonne gold into a stand-alone gold production.

In 2020, a definitive feasibility study into the project’s economics confirmed it could deliver “strong margins and cashflow” — two very important metrics by anyone’s standards.

The study suggested the project would require a capital outlay of $120m and could churn out a total asset of 658,000 ounces of gold over a projected 8.3-year mine life.

In pre-tax terms, Warrawoona was found to have a projected cashflow of $629m, an average EBITDA of $110m per annum, a net present value of $308m, an impressive internal rate of return of 81 per cent – and remarkably, a payback period of only 13 months.

A few years later, the company has seemingly delivered on its bumper financial projections, with management saying the project is now on course to become a strong cashflow generator for years to come. It’s great when a plan comes together.

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