Ramelius Resources has agreed to spend $28 million to bring the Mount Magnet operation back into production, making it the company's second producing gold mine in WA.
Ramelius Resources has agreed to spend $28 million to bring the Mount Magnet operation back into production, making it the company's second producing gold mine in WA.
Mining is scheduled to start in the second half of this year with first gold pours in the opening quarter of next year.
The decision will see an estimated total of 520,000 ounces of gold produced over an initial six years from the wholly owned Mount Magnet operation - a former gold producer located 600 kilometres northeast of Perth in the Murchison district.
Ramelius acquired the project for $40 million in July last year. It has total resources of 3.3m ounces of gold, complementing Ramelius' high grade 90,000 ounce per annum producing Wattle Dam underground gold mine near Kambalda.
Ramelius has since announced a revised mineral resource for the Galaxy area at Mount Magnet of 20.3mt at 1.65 g/t Au for 1,075,000 ounces of gold.
The project has previously produced in excess of five million ounces of gold, with more than two million ounces being produced from the historic Hill 50 mine.
"The recommencement of mining at Mount Magnet under our helm is not a large capital intensive operation, with estimated capital cost estimates of $28 million, including plant upgrade," Ramelius Chairman Bob Kennedy said.
"On current known fundamentals, Mount Magnet is expected to generate a cash surplus in excess of $187 million," Mr Kennedy said.
"We are also highly confident of further significant production upside through increasing the mill capacity and undertaking a further optimisation study on the project's ore bodies.
"The combination of a two stream gold output from Mount Magnet and Wattle Dam, and Mount Magnet's upside from the mill and project optimisation, will elevate Ramelius much closer to the mid-tier ranks of Australian gold producers at a time most global commentators forecast sustained price strength and demand in the medium-term."
The Ramelius mine plan estimates base case production of 520,000 ounces of gold over a 6 year period with expected total operating cost per ounce of $887/oz, substantially below the current spot gold price of approximately A$1400/oz".
Ramelius will spend nearly $14 million on refurbishing the on-site processing plant and a further $9 million on a new camp, tailings dam lift and other infrastructure.
Watpac Limited has been selected as the preferred mining contractor and GR Engineering Services Limited is being engaged to refurbish the plant.
Ramelius has A$90m in cash and gold on hand and no debt.
