Budding gold producer Calidus Resources has been buoyed by visible gold seen in drill core from a quartet of recent diamond holes aimed at verifying its high-grade Blue Spec satellite underground gold resource in WA’s prolific Pilbara goldfield. The company is working towards finalising an updated mineral resource estimate for Blue Spec as part of its continuing definitive feasibility study on mining and processing ore from the deposit.
According to Calidus, geological logging of the diamond drill core revealed several instances of visible gold in all four holes.
The program comprised an aggregate drilling coverage of about 2,500 metres, zeroing in on the known mineral resource to a maximum depth of 420m from surface.
Assays are pending for the confirmatory drilling and the company says the results will form part of the new resource numbers to be incorporated into the Blue Spec definitive feasibility study.
Blue Spec already boasts an inferred and indicated mineral resource calculated by previous owners that weighs in at 415,000 tonnes averaging a blockbuster grade of 16.35 grams per tonne for 219,000 ounces of contained gold.
Calidus has its sights set on capitalising on the Blue Spec high grades to significantly lift the average annual gold production rate during the projected peak output years at its developing Warrawoona gold mining and processing operation about 75 kilometres to the north-west.
It sees Blue Spec’s ore contribution propelling production at the Warrawoona project well past the 105,000 ounces per annum mark envisaged in the latter’s feasibility study tabled almost a year ago.
Calidus now says that gold production figure may jump to nearly 140,000 ounces per annum for three years – from year four to six – across an initial mine life of eight years.
The $215 million market-capped company plans to truck Blue Spec underground ore to Warrawoona, where processing of the ore will be carried out through a planned parallel sulphide treatment plant.
Construction is well advanced at Warrawoona and Calidus hopes to pour first gold there in the June quarter of next year.
Calidus Resources Managing Director Dave Reeves said: “These are the first holes we have drilled at Blue Spec and it is very comforting to have intersected visible gold. The results will form part of the definitive feasibility study resource upgrade and the core will also be used in the test work and studies now under way.”
The company proposes to kick off development of Blue Spec once steady-state production has been established at Warrawoona, which is located about 25km south-east of Marble Bar in WA’s East Pilbara region.
An “integration” scoping study released by Calidus almost six months ago foreshadows Blue Spec increasing forecast production at the Warrawoona central gold processing hub to 807,081 ounces of gold for the initial eight-year life of mine.
According to the study, the integrated gold mining and processing operation will churn out higher free cash flows before tax of $662 million or $82.75 million a year and after-tax cash flows of $472 million or $59 million a year, assuming a gold price of $2,355 an ounce.
All-in sustaining costs of gold production stay almost the same averaging a respectable $1,292 an ounce.
Pre-production capital costs for the construction of the new Warrawoona mine including the sulphide circuit come in at a total of $120 million.
Warrawoona’s foundation Klondyke deposit speaks for 521,000 ounces of contained gold from proved and probable open-pittable and underground ore reserves of just under 14 million tonnes running at an average grade of 1.2 g/t gold.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
