Egan Street upbeat on gold project

Gold-focused Egan Street Resources says it will cost $36.1 million to bring its Rothsay project in the Murchison region into production.

The company released a definitive feasibility study today, which outlined gold production of 250,000 ounces over an initial 6.5-year mine life.

The study also forecasts cash flow of $100 million from revenue of $414 million, with an all-in sustaining cost of $1,083/oz.

The project will also include a 200,000 tonnes per annum processing plant.

First gold production is targeted for the fourth quarter of 2019.

Managing director Marc Ducler said the study clearly demonstrated that Rothsay would be a high-quality gold project.

“It has been just two years since Egan Street listed on the ASX as a junior explorer and, with the completion of the DFS we are now on the cusp of making the transition from explorer to producer,” he said.

“The DFS outlines a robust project characterised by a modest capital cost, low forecast operating costs and strong margins.

“This underpins robust economics including an undiscounted pre-tax project cash-flow of $100 million, $80 million net present value and rapid capital payback of less than 1.5 years using a gold price of $A1,700 per ounce.

“Given Rothsay’s tier one location and robust economics, we are confident of being able to secure a very attractive financing package in the second half of this year, paving the way for construction to begin before year's end.”

The company said construction of the mine would begin once project financing had been obtained.

Egan Street has also appointed PCF Capital as financial adviser to assist with securing debt facilities for the project.

Shares in Egan Street were off 14.81 per cent at 23 cents each at 2.30pm AEDT.