Western Gold Resources Unveils Positive Scoping Study for Gold Duke Project
WESTERN GOLD RESOURCES LIMITED. (WGR) Share Update September 2024 Tuesday 24th
Western Gold Resources Announces Positive Scoping Study for Gold Duke Project
Western Gold Resources (ASX: WGR) has released a positive scoping study for its Gold Duke Project, highlighting the project's potential for significant cash generation and expansion.
Instant Summary:
- Scoping study assesses various options using third-party processing plants.
- Production target mining inventory: 447Kt at 2.55g/t producing 34koz gold.
- Estimated undiscounted accumulated cash surplus of $38.10M.
- Pre-mining capital and start-up costs estimated at $2.1M to $2.5M.
- Total funding requirements estimated between $6M and $7.2M.
- Study only assesses economics based on mining 51% of the current resource.
Scoping Study Overview
The Gold Duke Scoping Study evaluated various options for utilizing third-party processing plants under toll treatment agreements. The study defined a range of outcomes based on gold price and processing cost, including the cost of trucking ore from the Gold Duke Project.
Using a gold price of $3,500 per ounce, the production target mining inventory for the project is approximately 447Kt at 2.55g/t, producing 34koz of gold. This production target generates an estimated undiscounted accumulated cash surplus of $38.10M after accounting for all working capital costs and pre-mining capital requirements.
Financial and Operational Details
Pre-mining capital and start-up costs are estimated to be between $2.1M and $2.5M. The total funding requirements, including working capital, are estimated to range from $6M to $7.2M based on a multi-pit design, providing a 12-month mine life.
The company will now focus on securing a toll milling agreement and appointing a mining contractor to conduct operations. Additionally, WGR is assessing potential non-dilutive joint venture interests to advance the project.
Potential Upside
WGR Managing Director Warren Thorne emphasized the substantial further upside potential, as the scoping study only assessed the economics based on mining 51% of the current published 2.9Mt @ 2.07g/t for 234,000oz gold mineral resource of Gold Duke.
Thorne stated, 'The mine development has been optimized to minimize up-front capital costs, utilizing operational cash flow to self-fund mining. This generates open pit ore feed to nearby processing facilities. The mine plan has been designed to minimize risks associated with ramp-up and deliver a profitable gold producer in WA with significant upside to expand on the production profile and mine life.'
Next Steps
WGR will now take the next steps to assess its various alternatives, including third-party toll treatment, sale, or joint venture to advance the project to commercialization. In parallel, the company continues to advance exploration efforts across the project, aiming to find additional ounces to add to the mine plan.
The positive scoping study results indicate strong potential for the Gold Duke Project, which could significantly boost WGR's stock price. The project's ability to generate substantial cash flow with minimal up-front capital costs is a key advantage. The estimated cash surplus and low pre-mining capital requirements make this project attractive to investors.
Investor Reaction:
Analysts are likely to react positively to the scoping study results, recognizing the project's potential for cash generation and expansion. The focus on minimizing up-front capital costs and utilizing operational cash flow to self-fund mining operations is expected to be well-received by investors.
Conclusion:
Investors should keep an eye on WGR's progress in securing a toll milling agreement and appointing a mining contractor. The company's efforts to advance exploration and assess potential joint venture interests could further enhance the project's value. Stay informed on WGR's developments and consider the potential long-term benefits of investing in the Gold Duke Project.