Magnetic eyes low-cost, high-margin standalone gold production at Lady Julie

MAU economic review flags standalone production potential of Lady Julie gold project
Economics include payback of 12 months, AISC of A$1,386/oz and NPV $925M
Updates thanks to gold price rise and LJN4 resource increase

Special Report: Magnetic Resources’ economic update for the Lady Julie Gold Project in WA has demonstrated the project is both technically and financially robust.

The review has confirmed Lady Julie as a financially attractive standalone project with low-cost, high-margin gold production of 817,470 oz, averaging 104,000 oz/year, over an eight-year Life of Mine (LOM).

Exceptionally robust financial metrics include:

A payback period of 12 months from commencement of production
IRR of 135% at A$3,200/oz
Total EBITDA of A$1.49B at A$3,200/oz
Life of mine average C1 (operating) cost of A$1,377/oz
AISC of A$1,386/oz, including sustaining capital of $8M; and
Pre-tax NPV8 of $925M at A$3,200/oz.

The development capital of $111.3M (including 15% contingency provision for the plant cost estimate), assumes a standalone 2.2 Mtpa processing plant and three months pre-production activities.

The updates are mainly due to changing factors from the original Pre-Feasibility Statement (PFS) which include a gold price increase from A$2,800/oz to A$3,700/oz and the expanded Lady Julie North 4 (LJN4) resource, which enjoyed a more than 50% upgrade last month to 1.49Moz of gold – and has been reoptimised with several optimised shells selected for mine scheduling.

High margin undeveloped gold project

The plan is for an open pit mining inventory of 16.03Mt at 1.71g/t gold, containing 883,000oz gold.

Total life of mine production includes approximately 84% indicated and 16% of inferred mineral resource with the indicated resource forming the basis of the production schedule in the first six and a half years.

“The excellent outcomes demonstrate that Magnetic’s Lady Julie gold project is one of the high margins, undeveloped gold projects in Australia,” Magnetic Resources (ASX:MAU) Managing Director George Sakalidis said.

“The project’s low-cost profile and strong financial return metrics are primarily driven by the extraordinary near-surface, high-grade nature of the Lady Julie Central and Lady Julie North 4 deposits.

“This low-cost profile places the project in the bottom half of the cost curve of gold producers in Australia.”

Improving economics even further

The economic update focuses on mining the indicated and inferred resources of Lady Julie North 4, Lady Julie Central and Hawks Nest 9, with Lady Julie North 4 by far the largest contributor to the study producing over 14.0Mt of ore during its operation.

And there’s even more room for economic improvement, Sakalidis said.

“Further refinement of the project’s economics will be carried out in 2024 with scope to further improve the economics of the project from boosting process recoveries and modifying processing scenarios,” he said.

“More significantly, potential exists to further increase production and mine life estimates from the inclusion of resources drilled since the last update provided in July 2024.

“The Magnetic team has been very successful in defining new targets and making new discoveries with recent deep drilling confirming the resource continuity below Lady Julie North 4.

“2024 promises to be a very exciting year for the company.”

A mining proposal is currently being finalised to advance a further mining lease application and regulatory approvals to allow for mining.

A feasibility study is planned to be completed by year end.

This article was developed in collaboration with Magnetic 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.