• MAU releases feasibility study for Lady Julie gold project with strong economics
• Study outlines $970m NPV and IRR of 45% based on conservative A$4000/oz gold price
• Company says there’s room for growth with resources not included in the study

 

Special Report: Magnetic Resources has released a strong feasibility study for its Lady Julie gold project in WA highlighting robust economics and a standalone development pathway.

The study flags a 9-year life of mine (LOM) with low-cost production of 1.02Moz and averaging 140,000oz/year when in full production.

The pre-tax NPV is A$970m and IRR is 45% based on a gold price of A$4,000/oz. Notably, at the current gold price of A$5,145/oz this increases NPV to A$1668m and IRR to 66%.

What really stands out is the EBITDA of A$2,230m over Life of Mine at the A$4,000/oz gold price.

The study also outlines an average AISC of A$1,908/oz over LOM, which includes sustaining capital of A$101m.

The initial capex is A$375m (including A$15m contingency and A$47m working capital) with payback period of around 30 months from start of production, reducing to about 21 months at the current gold price.

It’s a big improvement from the pre-feasibility study for the project, due to expanding the resource at Lady Julie North 4 (LJN4), improved recoveries and the whopping jump in the gold price.

“This excellent outcome demonstrates that Magnetic’s Lady Julie gold project is one of the highest margin undeveloped gold projects in Australia,” Magnetic Resources (ASX:MAU) managing director George Sakalidis said.

“The project’s strong financial return metrics are primarily driven by the extraordinary near-surface, high-grade nature of the Lady Julie Central and Lady Julie North 4 deposits.

“This low-cost profile places the project in the bottom half of the cost curve of gold producers in Australia.”

 

140,000oz pa with room for growth

The operation comprises three open pits – LJN4, Lady Julie Central and Hawkes Nest 9 – an underground mine at LJN4 and a dedicated 2.75Mtpa gold processing plant with associated services and facilities.

Annual output will average 140,000oz when at full production with project construction expected to take just short of 2 years.

MAU also released a maiden mining reserve of 18.0Mt at.72g/t, containing 997,300oz gold – which includes both open pit and underground ore.

“The Feasibility Study focuses on mining the (mostly) indicated resources of the Lady Julie North 4, Lady Julie Central and Hawks Nest 9 deposits,” Sakalidis said.

“Lady Julie North 4 is by far the largest contributor to the study producing over 17.8Mt of ore during its operation.”

And there’s even more upside from resources of 3.3Mt at 2.64g/t containing 287,000oz which were excluded from the study due to only being defined in the deeper sections of Lady Julie North 4 after the underground designs were completed.

The company says this resource will be incorporated into future mine extensions and economic studies, pending infill drilling.

The next step is to work towards a final investment decision, and initial detailed engineering workstreams to allow for the ordering of key long lead items.

“This is an important time for the company as it now pivots its focus from exploration to construction readiness – while the board remains open to all options to deliver value for our shareholders, it is now increasingly focused on executing a stand-alone development as the primary pathway,” Sakalidis said.

 

 

This article was developed in collaboration with Magnetic Resources, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.