Murchison project positive for Metals X

Metals X looks set to proceed with its Central Murchison gold project following a favourable definitive feasibility study, which estimated the project would generate a pre-tax net present value of $142 million.

The expected capital expenditure costs will be $117 million prior to production, with total capital costs of $144 million over the forecast 11 year mine life.

The company currently has $84 million at its disposal to help fund the project, and is already in negotiations with international banks for debt funding arrangements to fill the remaining funding gap.

Annual production from the project would average around 1 mtpa with cash costs of around $979 per ounce.

Metals X chairman Peter Cook said the figures provided a “strong base” to commercialise the project and it was “very achievable both financially and technically”.

The company is already well advanced with permitting and mining approvals for the project, and has set a two year timeframe for pre-production activity.

The key orebody – Big Bell – was previously mined from 1995 before being shut down in 2003. That mining operation established a carbon in leach processing plant, which was later removed.

Metals X proposes potential construction of a new processing plant with capacity for 1.5 mtpa, but would use infrastructure still existing from the previous operation to reduce costs.

That existing infrastructure included borefields, airstrip, tailings dams and road networks.

But Mr Cook has also said the company would investigate utilising infrastructure already established by other producers in the region before committing to building a new processing plant.

“The Murchison region is alive again with at least six companies electing to ‘go-it-alone’ with the development or re-start of gold operations on projects with moderate lives and in most cases relatively high costs,” Mr Cook said.

“Metals X intends to study the benefits of consolidation of ore processing and development assets in this region before embarking on a decision to commit to its own stand-alone processing facility.”

Constructing a new processing plant would make up the bulk cost of the project – the feasibility study predicted it costing just under $90 million over the mine life.

Metals X shares were up 3.3 per cent to 15 cents each at 2:30PM WST.