Havilah Resources Ltd Moves Towards Short-Term Production from West Kalkaroo Gold Project
The company is targeting development of the West Kalkaroo open pit gold mine this year, subject to a final investment decision, obtaining financing and final approvals from the South Australian government.
Havilah Resources Ltd (ASX: HAV) (FRA: FWL) is moving towards near-term gold production at its large-scale Kalkaroo copper-gold-cobalt deposit in northeastern South Australia, near Broken Hill.
The Company’s priority has been to advance several key tasks required to start production at the West Kalkaroo open pit gold mine, including:
- Infill drilling that intersected extensive copper and gold mineralization
- Document on the progress of the environmental protection and rehabilitation program (PEPR);
- Advance the design of the process flowchart; and
- Generate a preliminary financial model.
“Progress towards development in 2021”
Havilah Technical Director Dr Chris Giles said: “The Kalkaroo Project has made significant progress since the start of the year in line with our indicative schedule for West Kalkaroo Project activities.
“Infill resource drilling continues to demonstrate good continuity of mineralization at constant copper and gold grades.
“We have engaged with several contractors and potential project funders to seek appropriate arrangements pending the feedback and approval of the PEPR document.
“Preliminary financial modeling of the West Kalkaroo open pit gold mine indicates robust returns for a modest down payment and should allow for a significant debt financing component.
“Our priority objective remains to move the West Kalkaroo open pit gold mine towards development in 2021, subject to a final investment decision by Havilah’s board of directors, securing financing. and final approvals from the South Australian government.
Several reverse circulation (RC) infill holes were completed along the strike of the proposed West Kalkaroo open pit to improve confidence in the continuity of mineralization, with the results to be used in future studies. mine planning.
Extensive copper and gold mineralization was intersected in most of the drill holes, with grades and widths of mineralization very typical of the Kalkaroo deposit, including 17 meters at 2.24 g / t gold of 110 at 127 meters (native copper zone) and 46 meters of 0.49% copper from 110-156 meters (native copper zone and chalcocite zone).
The low grade base of tertiary gold mineralization has also been extended by shallow aerodynamic drilling in or adjacent to the proposed West Kalkaroo open pit.
In addition, six sterilization holes were drilled near the planned locations of key infrastructure, including the processing plant, tailings storage facility and landfill, to ensure that they will not be overbuilt. near potentially economic mineralization.
The PEPR document, which is the final approval of permits required for the start of mining, was submitted to the Ministry of Energy and Mines (DEM) in March 2021.
To date, Havilah has had no other feedback than the methodology for calculating the rehabilitation bond, which the company is processing.
West Kalkaroo open pit gold pit contour cut line AB location (blue) which is under development (if possible) in 2021, subject to obtaining approvals and funding required
A process map design is well advanced, with further refinement in the selection of equipment.
The processing plant has been designed to process soft and clayey oxidized ore and recover larger gold and native copper (particle size greater than 50 microns) by gravity methods.
The finer gold would be recovered via a conventional cyanide leach circuit.
Notably, a positive feature of the Kalkaroo deposit is that although there is a high proportion of saprolite gold ore less than 10 microns, there is very little gold in this size fraction, which raises the possibility of rejecting a large mass of the very fine clay material before leaching – effectively increasing the ore flow rate of the leaching circuit.
The process diagram is currently being validated by laboratory tests.
Robust financial model
The preliminary financial model for the West Kalkaroo open pit gold pit is based on detailed open pit mine designs and ore mining schedules developed by Richard Buckley, senior mine planning engineer at Havilah.
This model is incorporated into the planned extensions of the original open pit gold mine designs that will merge with the eventual large-scale copper sulfide mining operation.
A financial model will be released in the short term when more precise operating and plant construction costs have been obtained and the model has been revised.
Given the reported strong preliminary economics of gold mining at current spot gold prices, the company intends to seek maximum debt financing for the project to avoid dilution of its equity. 100% in the Kalkaroo project (and currently free of external non-government royalties or flow obligations) and also to minimize shareholder dilution through significant fundraising.
Forecast copper demand
The Kalkaroo copper-gold-cobalt deposit contains JORC mineral resources of 1.1 million tonnes of copper, 3.1 million ounces of gold and 23,200 tonnes of cobalt and has an open pit JORC ore reserve of 100.1 million tonnes at 0.89% copper equivalent – 90% of which is in the proven category.
This makes it one of the largest undeveloped open pit copper-gold deposits in Australia based on copper equivalent ore reserves.
The Kalkaroo Project Pre-Feasibility Study (PFS) results released almost two years ago showed an estimated pre-tax NPV of 7.5% of AU $ 564 million and an IRR of 26% at 2.89 USD / pound of copper, USD 1,200 / ounce of gold, A $: US $ 0.75 – the net present value (NPV) of the Kalkaroo project being very sensitive to the prices of copper and gold metals.
Notably, the spot price of copper has seen a remarkable rise of over 30% since December 2020, leading to an upward adjustment in the long-term consensus price of copper to $ 3.50 / pound (according to Consensus Economics Inc).
With low sovereign risk, advanced, large-scale open-pit copper-gold development opportunities like Kalkaroo are scarce at a time when renewables and electric vehicles are increasing demand for copper and with copper prices exceeding 10,000. USD / ton (4.53 USD) / grind).
In addition, the mine-friendly South Australian government and the application of global best practices in ESG (environmental, social and governance) regulations mean that the Kalkaroo project ticks all the boxes as a potential future source of ethical copper (and potentially cobalt).