Final open pit approval clears way for mining at Western Gold’s Gold Duke project

Western Gold Resources has secured approval for open pit mining at the final deposit within its Gold Duke project
Company is now “shovel-ready” for 178,000oz of contained gold, or about 51% of the project’s total resources
Scoping study returned a 617% IRR and estimated that Gold Duke could generate cash surplus of $38.1m using a $3500/oz gold price
Mining pre-mining capital and start-up costs are estimated to be approximately $2.1-$2.5m and total funding requirements (including working capital) of between approximately $6-$7.2m, based on a multi-pit design, providing a 12-month mine life

Special Report: Western Gold Resources has cleared the final regulatory hurdle to start mining at its Gold Duke project in WA after securing approval for open pit mining operations at the Gold King deposit.

Approvals were already in place for the Eagle, Emu and Golden Monarch deposits. The latest nod from the Department of Energy, Mines, Industry Regulation and Safety means the company is now “shovel-ready” for first stage production of 178,000oz of contained gold, or 51% of the project’s total resource.

Gold at the project is contained within shallow oxide ore and can be processed at a third-party toll-treatment processing facility.

Western Gold Resources’ (ASX:WGR) recently released scoping study outlined a production target of 34,000oz per annum to generate estimated undiscounted accumulated cash surplus of $38.1m after paying all costs using an assumed Australian gold price of $3500/oz.

This is decidedly conservative as gold is currently priced just past the $4150/oz mark.

Mine development has been optimised to minimise up-front capital costs, utilising operational cash flow to self-fund mining and generating open pit ore feed to nearby processing facilities.

It has also been designed to minimise risks associated with ramp-up and deliver profitable gold production and the study outlines a modest pre-mining capital and start-up costs estimated to be ~$2.1m-$2.5m whilst total estimated funding requirements (including working capital) of between ~$6m-$7.2m were estimated based on a multi-pit design, providing a 12-month mine life.

Gold Duke project

Gold Duke is ~35-45km southwest of Wiluna township and 750km northeast of Perth on a relatively underexplored 25km strike of the Joyners Find greenstone belt.

It consists of seven granted mining leases covering a total area of 85.8km2 with access provided by either the partly sealed Wiluna-Meekatharra Road (Goldfields Highway) or via the unsealed Wiluna-Sandstone road accessed from the Goldfields Highway.

The eastern and central portions of the Joyners Greenstone Belt contain two large zones of intensely deformed and altered rocks which are intimately associated with the historical mine workings, known gold deposits and many of the geochemical anomalies.

These zones – the Brilliant Shear Zone and Joyners Shear Zone – traverse the entire length of the Gold Duke project and are up to 0.5km and 1.5km wide respectively.

Joyners Greenstone Belt has been the subject of exploration since the early 1920s with at least 20 locations showing historical gold workings.

Past production exceeded 40,000oz at a grade of 10.4g/t gold for the period 1912-1945, with the largest producers being Joyners Find and the Brilliant mines.

The area was then left largely unexplored until 1982 with 1928 drill holes totalling 70,483m completed by various operators since then.

Of these, 1282 drill holes for 47,083m were specifically drilled to test for gold mineralisation with 53% of the holes drilled deeper than 20m.

This has identified more than 20 gold occurrences, most of which are related to the Brilliant Shear Zone and Joyners Shear Zone.

Gold Duke currently has a resource of 2.95Mt grading 2.07g/t for 235,000oz of contained gold with higher confidence measured and indicated resources totalling 50,000oz found within the Golden Monarch, Eagle and Emu deposits.

This article was developed in collaboration with Western Gold Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.