Metals X aiming for 500,000oz

Metals X is aiming to become one of Western Australia’s biggest gold miners after announcing updated plans to develop its Central Murchison project, with mining to set to commence in July this year.

Chief executive Peter Cook said the results of a revised feasibility study were very pleasing.

“The initial development plans start with a 13-year mine life, and average annual gold production over the first 10 years to 200,000 ounces per annum,” he said in a statement.

Mr Cook said the project had good margins, with total cash cost of production of $A1,060 per ounce compared with an implied price of $A1,615/oz.

“Most importantly, and in keeping with the Metals X style, it presents a low-cost and low-risk development option for our shareholders with a maximum cash drawdown of $42 million and a simple pay-back of 1.5 years, all of which is capable of being funded from existing cash reserves,” he said.

The West Perth-based company is planning for the phased development of multiple open-pit mines, followed by longer-term development of underground operations.

The latter will be from four historic underground mines, including Great Fingall, Big Bell and Paddy’s Flat.

The Central Murchison production will be in addition to the expanding output at the company’s Higginsville and South Kalgoorlie operations, which produced 180,000oz in the year to September 2014.

Metals X is aiming to produce more than 350,000oz from its WA mines in 2016-17, which would rank it at number six the BNiQ list of WA gold miners.

By 2018, it is aiming for production in excess of 500,000oz, including its Rover project in the Northern Territory.

The company reworked its Central Murchison development plans after last year’s $7.7 million purchase of Reed Resources’ Bluebird processing plant near Meekatharra.

It said the plant was in excellent condition, and envisaged a low-cost restart with no circuit changes required.

The company noted there had been some confusion over the years as to the plant’s capacity, but has assumed it will process between 1.8 million and 2.2 million tonnes of ore per year.

The existing infrastructure in the region, including roads, accommodation camps, borefields, process water, tailings storage options, and the Bluebird plant, meant little spending was needed.

Metals X also plans to use contractors for all mining and cartage.

The only equipment it will need to buy is extra light vehicles and specific underground mining equipment.

With mining set to start in July, the company said first ore processing would be in October 2015.

The revised feasibility study is based on a US dollar gold price of $US1,275/oz and an exchange rate of US78 cents, to get an implied price of $A1,636/oz.

By comparison, nickel miner Panoramic Resources, which is evaluating two potential gold developments, is basing its studies on a gold price of $A1,500/oz.

Panoramic assumes a US dollar gold price of $US1,300/oz and an exchange rate of US85 cents.

Metals X estimates its project will create up to 350 new jobs and result in $92 million of royalties to the state government.

The company’s shares gained 7 cents in morning trade to $1.095, continuing its recent recovery from mid-December lows around 60 cents.