Borborema expansion set to run smoothly for Big River
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Big River Gold believes it has ensured its Borborema Gold Project in Brazil can be seamlessly expanded following the completion of an option study and that will aid in securing the funding required to move ahead with the development.
Big River (ASX:BRV) commissioned the options study to establish whether the 2Mtpa process plant proposed in the updated Borborema definitive feasibility study (DFS) delivered in July last year was the most efficient use of capital and that the design and equipment choice was best for allowing expansion at a later date.
An expansion to 4Mtpa throughput was nominated as that is the maximum production for which the project currently has permits.
The option study was done to an accuracy of +/-30% and the company plans to improve that to a DFS standard -10%/+15% in coming weeks. But the initial indications are of a potential reduction in upfront capital.
The updated DFS had a total capital expenditure for an initial 2Mtpa operation of US$98.5 million including contingency of US$11.5 million using 2019 economic parameters compared to the option study total capex of US$94.6 million including contingency of US$15 million.
Included in the option study was an indicative estimate of the incremental cost of plant, equipment and engineering that might be required to increase the plant capacity up to 4Mtpa of US$34.8 million including contingency of US$5.8 million.
Big River noted that the final cost of the expansion would be determined by ongoing feasibility studies subject to the securing of additional process water to support the higher throughput, which the company is optimistic about.
“We are very pleased with the results of the options study as it leads to a more efficient use of capital and a strong basis for future expansion studies,” executive chairman Andrew Richards said.
“We also anticipate some encouraging outcomes as we move to establish more precision on the costings over the coming weeks.”
No changes to the Borborema process circuit were proposed as part of the option study, but the selection of some different equipment and changes to the plant layout were recommended to facilitate future expansion with minimal disruption.
The study also gave an indication of the operating cost benefits that may be forthcoming through plant expansion.
While only looking at costs relating to key areas of the plant for comparison, not mining, administration and other costs, it suggested a 4Mtpa operation could deliver a significant saving compared to a 2Mtpa operation.
Subject to the work being undertaken to improve the capital estimate accuracy, Big River intends to update the Borborema financial model and resume discussions regarding project finance in coming weeks.
Having completed a transformational $20 million capital raising cornerstoned by highly regarded North American resources investor Dundee Goodman Merchant Partners in December, the company is well funded to push ahead with other activities in parallel with funding talks.
“Despite the delays in securing finance in 2020, due in large part to difficulties related to the pandemic, the Company considers itself to be in an excellent position moving forward given the funds raised in December 2020,” Richards said.
“The company will not only resume the process of securing project finance but has sufficient cash reserves to significantly advance the project with detailed FEED engineering and infrastructure development in parallel with that process.
“These are areas that are normally only able to be progressed once project finance has been secured.”
The December raising has also allowed Big River to undertake exploration at Borborema for the first time since 2014.
The focus of the drilling will be on tenements to the south-west of the project as well as identifying high-grade extensions within the project concessions and converting inferred resources to indicated to potentially increase reserves within the current pit designs.
Borborema has a Mineral Resource of 68.6Mt grading 1.1g/t for 2.43Moz and an Ore Reserve of 42.4Mt grading 1.18g/t for 1.61Moz.
The proposed 2Mtpa stage one develops has scheduled in to mine less than half the current reserve to produce 730,000oz of gold.
This story was developed in collaboration with Big River Gold, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.