TIDMBGL
RNS Number : 2361I
Bullabulling Gold Limited
01 July 2013
BULLABULLING GOLD LIMITED
1 July 2013 AIM Code: BGL, ASX Code: BAB
NEW BULLABULLING MINE PLAN DELIVERS SUBSTANTIAL SAVINGS
-- Average life of mine C1 cash costs of US$843 per ounce
-- All in cash costs of US$930 per ounce
-- 2.1 million ounces produced over a 12 year mine life
-- Further potential remains for extending mine life and reducing costs
Bullabulling Gold Limited is pleased to report that the Company
has completed an updated economic assessment of the Bullabulling
Gold Project based on a revised open pit design and mining plan
developed during the initial phase of the definitive feasibility
study (DFS).
The new mine plan has delivered a substantial improvement in
cash costs, extended mine life and increased gold production
relative to the pre-feasibility study (PFS).
Gold production of 2.1 million ounces is forecast over a mine
life of 12 years with average C1 cash costs of US$843 per ounce.
State and private royalties total US$63 per ounce and sustaining
capital amounts to US$24 per ounce, taking total all in cash costs
to US$930 per ounce.
"We are very happy with the outcome of this work, which is in
line with our expectations for a project of this scale", commented
Bullabulling Managing Director, Brett Lambert. "It is also pleasing
to note that the optimisation studies suggest the mine design can
be adapted to suit a wide range of gold prices, with robust cash
margins indicated at all levels.
We will now turn our attention to other areas of the project
where there is potential to improve costs and deliver more gold,
confident that attention to detail and focus on efficiency will
continue to get results."
The mine plan is based on development of four open pits.
Detailed pit designs were developed from a Gemcom Whittle(TM) pit
optimisation that was run and financially evaluated at a gold price
of A$1,500 per ounce, which equates to US$1,371 per ounce at the
exchange rate at close of business on 28 June 2013 of 0.9138.
Total mining inventory within the pits is 89.3 million tonnes
grading 0.84 g/t for 2.4 million ounces of contained gold, which
correlates well with the corresponding Whittle optimisation
results. Average strip ratio over the life of mine is 3.6 to 1.
Relocation of the highway and power transmission lines to enable
amalgamation of the Phoenix, Edwards and Bonecrusher pits will be
evaluated as part of the on-going DFS. This would extend mine life
and increase gold production and is also expected to improve
efficiency of the pit design. Relocation of this infrastructure
would not need to take place until near mid-way through the
scheduled mine life.
The PFS capital cost estimate for fixed plant and infrastructure
of A$326 million has been retained for the current evaluation.
However the next stage of DFS will review and refine this estimate
and there is an expectation that construction costs may reduce as a
result of the recent sharp downturn in construction activity within
the Western Australian mining sector.
In the current study, pre-production capital expenditure of
A$81.6 million has been allocated for procurement of the mining
fleet to accommodate owner mining. A further A$10.5 million has
been allowed for additional mining equipment as mining ramps up and
pit depth increases. Mine establishment and pre-production mining
expenses have been estimated at A$32.4 million.
Based on the above parameters, the project would generate net
cash flow of $564.5 million over the scheduled mine life. Net
present value at an 8% discount rate is A$166.0 million and
internal rate of return is 15.2% before tax.
Mining equipment manufacturers have indicated a willingness to
provide funding for the purchase of the fleet through a stand-alone
facility that may enable the Company to receive the benefits of
owner mining without material impact on funding of the core
project. Dry hiring the fleet during the early years of the project
will also be evaluated as a means of reducing pre-production
capital requirements. This may also lift NPV and IRR.
Key project statistics are summarised in Table1 below.
Table 1 - Key Project Statistics
---------------------------------------------------------------------------
Mineral Resources (excluding Tonnage Grade Cont'd Gold
Gibraltar)
----------------------------------- --------- ------------ -------------
Indicated Resource 72.7Mt 0.97g/t 2,274,000
oz
----------------------------------- --------- ------------ -------------
Inferred Resource 35.7Mt 1.10g/t 1,264,000
oz
----------------------------------- --------- ------------ -------------
Total Resource 108.4Mt 1.02g/t 3,538,000
oz
----------------------------------- --------- ------------ -------------
Mining Inventory Tonnage Grade Cont'd Gold
----------------------------------- --------- ------------ -------------
Indicated Resource 76.3Mt 0.82g/t 2,007,000
oz
----------------------------------- --------- ------------ -------------
Inferred Resource 13.0Mt 0.97g/t 405,000 oz
----------------------------------- --------- ------------ -------------
Total Mining Inventory 89.3Mt 0.84g/t 2,412,000
oz
----------------------------------- --------- ------------ -------------
Capital Costs Life of Mine
----------------------------------- --------- ------------ -------------
Fixed Plant & Infrastructure A$326.4M
----------------------------------- --------- ------------ -------------
Establishment & Pre-production A$32.4M
Mining
----------------------------------- --------- ------------ -------------
Mobile Equipment - Pre-production A$81.6M
----------------------------------- --------- ------------ -------------
Mobile Equipment - Additions A$10.5M
----------------------------------- --------- ------------ -------------
Sustaining Capital A$54.4M
----------------------------------- --------- ------------ -------------
Production Summary Years 1-3 Life of Mine
----------------------------------- --------- ------------ -------------
Project Life 3 years 12 years
----------------------------------- --------- ------------ -------------
Strip Ratio 4.4:1 3.6:1
---------------------------------------------- ------------ -------------
Annual Processing Rate 7.5 Mtpa 7.5 Mtpa
----------------------------------- --------- ------------ -------------
Processing Recovery 87.0% 87.3%
---------------------------------------------- ------------ -------------
Gold Production 569,000 oz 2,106,000
oz
----------------------------------- --------- ------------ -------------
Total Operating Costs A$21.39/t A$21.79/t
----------------------------------- --------- ------------ -------------
Project Economics Years 1-3 Life of Mine
----------------------------------- --------- ------------ -------------
Base Case Gold Price US$1,371/oz US$1,371/oz
----------------------------------- --------- ------------ -------------
C1 Cash Costs US$774/oz US$843/oz
----------------------------------- --------- ------------ -------------
NPV at 8% discount (Pre-tax) $166M
---------------------------------------------- ------------ -------------
IRR (Pre-tax) 15.2%
---------------------------------------------- ------------ -------------
Net Cash Flow (Pre-tax) -A$111M A$565M
---------------------------------------------- ------------ -------------
Whilst the current mine plan has been designed to optimise value
at a gold price of A$1,500 (US$1,371) per ounce, a series of
optimisation runs were carried out at gold prices ranging from
A$1,200 (US$1,097) per ounce to A$1,800 (US$1,645) per ounce. The
results, summarised in Table 2 below, provide guidance on gold
production and cash costs for mine plans based on alternative gold
prices.
Table 2: Bullabulling DFS Whittle Pit Optimisation Results
----------------------------------------------------------------------------------
Optimisation Tonnage Grade Mine Life Contained Recovered Indicated
Gold Price Gold Gold C1 Cash
Cost
------------- -------- --------- ---------- ---------- ---------- ----------
US$1,097/oz 50 Mt 0.92 g/t 7 years 1.5 Moz 1.3 Moz US$716/oz
------------- -------- --------- ---------- ---------- ---------- ----------
US$1,234/oz 77 Mt 0.86 g/t 10 years 2.1 Moz 1.9 Moz US$797/oz
------------- -------- --------- ---------- ---------- ---------- ----------
US$1,371/oz 92 Mt 0.85 g/t 12 years 2.5 Moz 2.2 Moz US$843/oz
------------- -------- --------- ---------- ---------- ---------- ----------
US$1,508/oz 109 Mt 0.83 g/t 15 years 2.9 Moz 2.5 Moz US$897/oz
------------- -------- --------- ---------- ---------- ---------- ----------
US$1,645/oz 120 Mt 0.81 g/t 16 years 3.1 Moz 2.8 Moz US$936/oz
------------- -------- --------- ---------- ---------- ---------- ----------
Factors that led to the improvement in economic performance
relative to the PFS include:
-- Additional high grade resources in the Gryphon area resulting
from drilling carried out in the March quarter (see release of 13
May 2013)
-- Reduced mining costs based on owner mining and the
utilisation of larger excavators and trucks
-- Amended pit slope designs to improve geotechnical stability and reduce waste stripping
-- Amended waste rock stockpiling strategy to utilise dumps on
both sides of the open pit resulting in reduced haulage
distances
-- Allowance has been made to source a combination of locally
generated power and power transmitted from the south-west grid
-- Use of an alternative tailings storage facility design with reduced construction costs
Whilst work to date has centered on improving the mine plan, the
DFS will also evaluate opportunities to improve performance in
other areas including:
-- Additional metallurgical test work aimed at lifting plant gold recoveries
-- Review of plant and infrastructure capital expenditure
following marked fall in WA and global demand for
mining/construction service providers
-- Review of processing operating costs
-- Relocation of infrastructure to enable the Phoenix, Dicksons
and Bonecrusher pits to be combined to extend mine life and improve
mining efficiency
-- Inclusion of Gibraltar into the mining plan to extend mine life and lift average grade
-- Further drilling to consolidate resources within or in close
proximity to the current pit designs
This announcement, including figures, will be available on the
Company's web site.
Brett Lambert Westhouse Securities Limited
Bullabulling Gold Limited (UK Broker & Nominated Adviser)
Level 2, 55 Carrington Street Martin Davison/Jonathan Haines
Nedlands, WA, 6009, Australia Tel: +44 20 7601 6100
Tel: +61 8 9386 4086
------------------------------- -----------------------------------------------
Neil Boom John Gardner / Rupert Dearden
Gresham PR Ltd (UK media) MAGNUS Investor Relations. Corporate
Tel: +44 7866 805 108 Communication. (Australian Media)
Tel: +61 8 6160 4900
jgardner@magnus.net.au rdearden@magnus.net.au
------------------------------- -----------------------------------------------
For information, contact:
Competent Person Statements
The information in this report that relates to the Exploration
Results, Mineral Resources or Ore Reserves is based upon
information compiled by Mr Trevor Pilcher, who is a full time
employee of the Company and is a member of The Australasian
Institute of Mining and Metallurgy. Mr Pilcher has sufficient
experience relevant to the style of mineralisation and type of
deposit under consideration and the activity in which he is
undertaking to qualify as a Competent Person under 2004 Edition of
the Australasian Code for Reporting Exploration Results, Mineral
Resources and Ore Reserves (JORC Code). Mr Pilcher consents to the
inclusion in this report of the matters based on his information in
the form and context in which it appears.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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