Diamond drilling by gold producer in waiting, Calidus Resources, has threaded the eye of the needle, striking gold more than 600 metres below surface at its under-construction Warrawoona gold mine in WA’s East Pilbara region. According to the company, the narrow, high-grade gold drill hits provide it with plenty of encouragement for a potential longer-term underground mining proposition at Warrawoona.
Best intersections returned from the two deep diamond holes about 250m-300m below the project’s current Klondyke mineral resource extremities were 1.79m at an average grade of 4.82 grams per tonne gold from 626m and 1m going 5.12 g/t from 638m. Other significant intercepts include 1m at 3.87 g/t from 607m, 1.92m at 2.84 g/t from 589.08m and 3m at 1.84 g/t gold from 599m. Perth-based Calidus says the drilling results strongly point to the Klondyke mineralised shear and associated alteration zones extending at depth.
Calidus Resources Managing Director, Dave Reeves said: “This drilling demonstrates that the main mineralised Klondyke shear zone continues at depths well below the designed open pit and underground (mine) and highlights the longer-term underground potential at Warrawoona.”
“With main construction about to start, the scoping study on the nearby Blue Spec deposit almost completed and exploration ramping up, our strategy to develop the project while growing the gold inventory is progressing to plan.”
The Klondyke deposit, which is located approximately 25 kilometres south-east of Marble Bar, hosts latest published proved and probable open-cut and underground reserves of 14 million tonnes of ore grading 1.2 g/t for 521,000 ounces of contained gold.
Klondyke ore reserves sit within an open-pittable and underground measured, indicated and inferred resource estimate of 42.3 million tonnes at 1.02 g/t for 1.4 million ounces of contained gold.
Calidus says the recent deep drilling, aimed at establishing continuity of the mineralised system at depth and delineating areas potentially amenable to underground mining, now shows the presence of the main Klondyke shear at depths of more than 550m below surface.
Last year’s definitive feasibility study, or “DFS” on Warrawoona foreshadowed annual gold production at the new stand-alone mining and processing operation of about 90,000 ounces a year over the first seven years of its initial life of mine of 8.3 years.
Production start-up at Warrawoona, which will require about $120 million in CAPEX, has been earmarked for some time in the 2021-22 financial year, with the main construction phase cranking up this quarter.
Financial projections in the DFS include an impressive EBITDA averaging $110 million per annum and free cash flows after tax of $447 million or $53.8 million a year, based on a gold price of $2,500 an ounce.
All-in sustaining costs of gold production at Warrawoona have been forecast at an average $1,290 an ounce and the capital payback for the project has been estimated at just 13 months.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
