ASX-listed gold developer, Calidus Resources, has cleared the critical final ministerial environmental approval hurdle for its planned $116 million Warrawoona mine 20km south-east of Marble Bar in WA’s East Pilbara region. The company is now progressing debt financing negotiations and says it has plenty of interest from debt providers as it looks to short-list potential lenders next month ahead of the project’s definitive feasibility study being tabled.
The receipt of ministerial approval is a major milestone for Calidus and is the culmination of many years of work by the company and its consultants. We can now finalise all operating permits and remain firmly on track to begin main project development early in the new year.
The goal of main project development early in the new year is well supported by the indicative debt term sheets we have now received and we look forward to working closely with the independent technical expert and short-listed financiers with the aim of securing debt funding by the end of the year.
First gold is expected to be poured at Warrawoona about 10 months after the main construction phase begins.
Construction of a 240-person accommodation village and access road and the installation of communications infrastructure are scheduled to kick off in the fourth quarter of 2020.
Part of the $25 million in proceeds from last month’s successful capital raise by the company will be used to finish the DFS and for the early works phase.
Calidus’ updated pre-feasibility study on Warrawoona forecasts average gold production of 85,000 ounces per annum for the first six years of operations and total production of 623,000 ounces over an initial eight-year mine life.
Assuming a gold price of A$2,500 an ounce, Warrawoona is predicted to churn out impressive free cash flows before tax of $648 million in the first eight years of production.
All-in sustaining costs of production are estimated at just A$1,251 an ounce, with a net present value after tax of $423 million attributed to the project.
Warrawoona’s proved and probable reserves currently stand at 13.6 million tonnes going 1.2 grams per tonne for 519,000 ounces of contained gold.
Perth broking firm, Euroz Securities, says the strong cash flows and low working capital suggest the project could support debt funding levels of more than 70 per cent, which would ensure the company’s capital structure did not blow out too much in order for it to get into production.
As part of the debt financing process, Calidus has appointed an independent technical expert to provide an initial draft report, which is almost ready.
Euroz also said recently that: “It (Calidus) remains one of the few domestic emerging gold producers with production likely in calendar year 2021.”
“In the short term, deep drilling at Klondyke and at the newly acquired Otways project should provide some sizzle before the DFS is delivered at the end of the September quarter.”
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