Bardoc sees clear pathway to mid-tier gold production on the doorstep of the Golden Mile
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Special Report: Bardoc Gold (ASX:BDC) says the location of its namesake ~3-million-ounce (moz) gold project on the doorstep of Kalgoorlie gives it some big competitive advantages as it charts a course to become one of the region’s biggest new mid-tier producers over the next two years.
The Perth-based company today handed down a positive pre-feasibility study (PFS) on the project, outlining an initial eight-year project producing on average 135,000 ounces of gold a year at an all-in sustaining cost (AISC) of $1220 an ounce.
“The strong PFS outcomes show that Bardoc is one of the best undeveloped gold projects in the Eastern Goldfields,” says the company’s CEO, experienced mining executive Rob Ryan.
Ryan, who spent almost 18 years living and working in Kalgoorlie, knows the area inside out and believes that advantages such as proximity to infrastructure and logistics supply lines and a residential workforce (rather than a fly-in, fly-out operation) will be big ticks for the new development.
Bardoc has consolidated a sizeable 250sqkm tenement package north of Kalgoorlie and amassed a sizeable 3.02moz resource inventory at Bardoc through a series of M&A deals (mergers with Aphrodite Gold and Excelsior Gold) and, more recently, some well-timed strategic acquisitions.
The Bardoc PFS announced today provides the first glimpse of the consolidated project’s commercial potential.
The engine room of the project, according to the PFS, is two underground gold mines and four open pits feeding a centrally located 1.8-million-tonne-per-annum carbon in leach (CIL) plant incorporating a flotation circuit to accommodate the non-free milling portion of the reserve base.
Bardoc plans to utilise this flotation circuit to produce a gold concentrate, rather than invest in expensive alternatives – following a well-worn processing pathway employed by several other recognised producers.
As a result of this and other advantages, the pre-production capital figure is a relatively modest $142.2m which, combined with strong forecast operating pre-tax cash-flows of $551m, underpins strong financial returns.
Using a conservative $2100/oz gold price, the project generates a net present value (NPV) (8 per cent) of $332m and 32 per cent internal rate of return (IRR).
If the gold price is hiked to current spot levels (~$2,530), the NPV jumps to $600m and the IRR to 55 per cent, while project life-of-mine cash-flows surge to $921m.
While the PFS sets a strong base case for the Bardoc project with robust financial and economic returns, the company says the clear upside potential remains one of its most compelling features.
“Firstly, there’s plenty of room to grow the current 1moz mine plan within the existing 3moz resource,” Ryan says, noting that active drilling programs are already underway across several deposits to upgrade inferred resources to indicated, available for conversion to reserves.
“Secondly, with major exploration programs underway, there is also strong potential to continue growing the resource, as evidenced by recent drilling successes at satellite deposits such as Mayday North, El Dorado and North Kanowna Star,” he adds.
One of Bardoc’s key attributes is its strong balance sheet ($13m in cash and no debt), which means it can continue to push ahead with an aggressive exploration approach without needing to go back to the market.
The company is aiming to grow its global resources by drilling out several of these satellite deposits and ultimately completing economic studies and bringing them into the mine plan.
“The addition of one or more free-milling deposits to our mine plan could make a big difference to the overall economics of what is already a robust project,” Ryan says. “And if we make a breakthrough with the discovery of a big new greenfields deposit somewhere, well that would be an absolute game-changer.”
Some analysts point to the recent success of De Grey Mining (ASX: DEG), which was pursuing a development and production strategy based on its known resources but recently made a massive breakthrough with the high-grade Hemi discovery.
“A lot of the areas within our tenement package have been virtually untouched by exploration for 20 or 30 years, so the potential is definitely there,” Ryan says, “particularly along major regional structures such as the Black Flag Fault.
“We already see clear potential to grow the project at deposits like Mayday North and El Dorado. If we find something else in the meantime – well that would be a massive step forward for Bardoc.”
Ryan says the experience of the company’s leadership team (its board features founding Pilbara Minerals executives Tony Leibowitz, Neil Biddle and John Young), plus his own highly skilled development and operations team with their extensive Kalgoorlie expertise, will help to ensure Bardoc can successfully navigate the transition from explorer to producer.
“We’re well aware of the pitfalls that have befallen other developers in the junior gold space, however we are confident that we have all the right ingredients to be successful,” he said.
“We’re in the best possible location to develop a new gold mine, the project as currently defined is exceptionally robust, and we have a very manageable cost and production profile.
“The definition of a 789,000oz maiden ore reserve underlines the financial viability of the project, with 77 per cent of our production profile underpinned by ore reserves and 80 per cent by measured and indicated resources.
“These are already good numbers and we are confident we can do a lot better than this once we push the button on financing and construction early next year.”
With a modest post-Coronavirus crash market capitalisation of just $67m, there will be plenty of interested investors keeping a close eye on the company’s progress over the next few months.