The boost to reserves resulted from efforts by Wiluna’s (ASX:WMX) geological and mining teams over the past 18 months to grow resources and convert ‘inferred’ material to higher confidence categories — all in preparation for the miner’s transition to ‘gold in concentrate’ production.

Wiluna has reported a high confidence ore reserve update as it transitions to underground mining and production of gold in doré and concentrate from a new flotation circuit at the Wiluna Mining Centre in WA.

The underground ore reserve is now 142% bigger to 4.33 million tonnes at 4.74g/t gold for 661,000 contained ounces.

The large increase in underground reserves affirms the Wiluna’s “Under the Headframe” strategy — expand underground reserves around previously mined areas to support near term production, before progressively ‘stepping out’ to support an expanded production rate.

The company is moving toward a production profile of 120,000oz per year of gold and gold in-concentrate in 2021 from 60,000oz/year currently.

The company believes its valuation should substantially re-rate in the next three years due to a staged production profile increase to approximately 250,000oz per annum, costs decreasing due to scale, expected increase in resources, and discovery results.

“Our geologists have made great progress to expand the resources around existing underground infrastructure for a rapid and low-cost start to sulphide ore production,” Wiluna exec chair Milan Jerkovic says.

“This [underground] ore reserve is sufficient to support a +5 year operation at 750ktpa Stage 1 processing rates and provides a sound base upon which to further develop the mineral resources and ore reserves for the long life operation we expect Wiluna to be.”

Open pit reserves have reduced, but Wiluna continues to investigate ways to bring this abundant, broad mineralisation back to a reserve status in the coming years, Jerkovic says.

“Offsetting this reduction has been the strong improvement in the Wiltails Tailings Retreatment Project economics following additional mineral resource and metallurgical testwork which has expanded the ore reserve from 234koz to 579koz, providing the opportunity to generate a steady, long term gold production stream over a 15-year life for the existing CIL processing plant.”

The potential for extensions to known resources at Wiluna is considerable.

“We will continue to maintain the momentum we have built to methodically infill drill the significant gaps between defined lodes, upgrade inferred mineralisation to indicated or better and to plan for a productive and low cost mining operation,” Jerkovic says.

“Our 2021 drilling program will continue to target infilling the mineral resources, particularly in the Happy Jack, Bulletin and Essex areas with the intention to add 500koz to the ore reserve base for inclusion in the Stage 2 Feasibility Study.”

This article was developed in collaboration with Wiluna, 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.