Capricorn Metals (ASX:CMM) is targeting first gold from its Karlawinda project in the Pilbara by June 2019 after a feasibility study found it to be a robust, high-margin project.

The study was based on a single open pit mine at the Bibra deposit and associated 3 million tonnes per annum Carbon in Leach plant.

It is estimated to cost $133 million to build a processing plant and infrastructure, plus a contingency of $13.1 million. Payback is expected within three years of first production.

Ore reserve estimate stands at 21 million tonnes at 1.06 grams per tonne containing 713,000 ounces with an initial 6.5-year mine life based on current ore reserve.

Average life of mine production of around 100,000 ounces per annum with estimated all in sustaining costs of $1025 an ounce.

The project generates an undiscounted pre-tax operating surplus of $413 million from total revenue of $1091 million.

“This study provides us with the confidence that Karlawinda will become a significant new Western Australian gold mine with a strong production profile, low forecast operating costs and the ability to generate strong financial returns over its initial 6.5-year life and beyond,” Capricorn’s executive chairman Heath Hellewell said.

Karlawinda is expected to begin construction early in second quarter 2018 with first production in the second quarter 2019.

The company is now restarting exploration activities at the project with a view to increase resource size.

Shares in Capricorn (ASX:CMM) closed yesterday up 1.3 per cent at 7.8c. Company has a market capitalisation of $44 million.