Egan Street Resources Limited (ASX: EGA) (EganStreet) is pleased to advise that following the release of the November MRE, it has completed a reserve estimate on its 100%-owned Rothsay Gold Project (Project), located 300 km north-east of Perth in WA’s Midwest region.
The reserve estimate builds on the updated DFS (See ASX announcement “Rothsay Gold Boosted by Production Target Upgrade” dated 12th February 2019) and DFS (see ASX announcement “EganStreet Confirms Low Capex, High Margin Australian Gold Mine at Rothsay God Project, WA” dated 19th July 2018) however incorporates new information obtained from additional technical studies completed to July 2019. The reserve estimate includes the following:
- November 2018 MRE (See ASX announcement “Rothsay Resource Increases to 454,000oz at 9.2g/t Au” dated 27th November 2018)
- Improved Cost estimates as outlined in the updated DFS
- Additional Geotechnical modelling based on drill holes completed up until November 2018
- An updated mine plan targeting shorter pre-production period and lower pre-production capital (including working capital) which includes
- Boxcut and access to southern end of the orebody
- Increased sublevel interval
- increase decline turning radius
- earlier establishment of primary ventilation and escapeway via shorter raises.
- All other assumptions are consistent with those outlined in the DFS
The new Ore Reserve stands at 235,000oz and is shown in Table 1 below:
The reserve estimate delivers an 18% increase in the reserve and further demonstrates the upside potential available at the Rothsay Project. The associated JORC Table 1 is available in Appendix 2.
The increased reserve has no material impact on the previously reported production target included in the Updated DFS announced to the ASX on the 12 February 2019, the production target remains as stated in that announcement.
Mineral Resource Estimation
The Mineral Resource Estimate (MRE) for the Rothsay Gold Project was updated by Cube Consulting Pty Ltd in November 2018 (See ASX announcement “Rothsay Resource increases to 454,000oz at 9.2g/t Au” dated 27 November 2018), the associated JORC Table 1 sections 1 to 3 can be found in appendix 2. The November 2018 MRE is an update of the May 2018 MRE and incorporates the results of reverse circulation (RC) and diamond drilling programmes completed between May and September 2018, which consisted of 46 holes for 5,042m of RC and 16 holes for 4,631m of diamond core.
The MRE has been classified and reported in accordance with the 2012 Edition of the JORC Code. The current MRE is reported at a cut-off grade of 2.5g/t Au (refer to Table 2).
The total Rothsay MRE has increased to 1.54 million tonnes at 9.2g/t Au for 454,000oz (an increase of 53,000 ounces from the previous MRE of 1.42Mt @ 8.8g/t Au for 401koz). Importantly, the Indicated portion of the Mineral Resource, which is available for conversion to Ore Reserves, has increased by 45.8koz to 0.95Mt at 9.6g/t Au for 292koz (from 0.82Mt @ 9.3g/t Au for 246koz). The Inferred portion of the Mineral Resource has increased by 5% to 0.59Mt @ 8.6g/t Au for 162koz (from 0.60Mt @ 8.0g/t Au for 155koz).
JORC Table 1 is detailed in Appendix 2.
The Ore Reserve for the Rothsay Project is summarized in Table 3 below:
The Ore Reserve has been estimated, as detailed in this announcement and using assumptions outlined in the DFS and updated in the updated DFS. The Ore Reserve includes a minor volume of material classified as inferred, this volume is included as dilution at the periphery of stopes otherwise containing a majority of indicated material (shown in Figure 1 and Figure 2). The associated JORC Table 1 is detailed in Appendix 2.
The following material assumptions have been used to estimate the Rothsay Ore Reserve
- AUD gold price of $1600 per ounce
- Gold recovery based on the assumptions detailed in the Updated DFS, with Life of Mine Gold recovery (exclusive of ore sorting) of 94.3%, using a “floating” gold recovery based on copper feed grades.
- Capital Costs estimated on the same basis as the Updated DFS (refer to section 6)
- Operating costs estimated on the same basis as the Updated DFS (refer to section 7) using an updated design and schedule
- Dilution and recovery assumptions as per the DFS and Updated DFS
- Geotechnical assumptions updated for additional available data
Financial modelling of the reserve generates a positive net present value with significant margin to consider the reserve insensitive to reasonable fluctuations in market factors.
As a part of the July 2018 DFS, Entech Pty Ltd (Entech), Maksena Engineering Solutions Pty Ltd (Maksena) and EganStreet completed a mining study to a Definitive Feasibility level of accuracy. Maksena updated the mining study as part of the Updated DFS (see ASX announcement “Rothsay Gold Project Boosted by Production Target Upgrade” dated 12th February 2019) to update for the November 2018 MRE and mining capital and operating costs.
EganStreet has completed further design optimization focused on reducing the pre-production capital as well as reducing the pre-production period, the key changes in the study include: modified access design utilising a boxcut developed on the southern most Orient pit, rehabilitation of the old decline deferred until year 2 of the mine life, increased level spacing from15m to 17.5m and updated geotechnical information.
The geotechnical parameters used for the reserve have been updated with additional information collected from drill programs leading up to the November 2018 Resource. Key changes include domaining a number of lower RQD areas separately and redesigning pillars based on numerical stress modelling. The resulting stope spans are shown in Figure 3.
In addition, Figure 4 shows the pillar design used for the reserve.
Mine Access Design
The key mine design parameters remain largely unchanged from the updated DFS, however; the decline turning radius, sublevel spacing and stope height have all been increased. The design parameters are outlined in Table 4.
The access strategy for the orebody has been modified, accessing the ore located to the south which is within 50m of surface. In order to achieve an access from the south the existing pit on the Orient Shear will be enlarged to create a boxcut from which a decline can be commenced. The boxcut is developed in the southern most Orient pit, the final excavation requires mining approximately 37,500 BCM and has the following characteristics:
- 17.5m target depth
- Inter bench wall angle of 56 degrees
- 4m wide catch berm installed 10m from the ultimate depth of the boxcut.
Ventilation is provided by mining a short (46m) exhaust raise and an associated escapeway. The existing decline is rehabilitated but commencement is deferred later in the life, the rehabilitated decline serves as the additional intake airway, allowing the removal of the 2 long airways from the previous designs.
Figure 5 shows the site layout, proposed boxcut location, updated mine design and reserve footprint.
The reserve uses Long Hole Open Stoping (LHOS) with insitu (rock) rib pillars, Sill pillars are placed every 5levels (87.5m) to limit open vertical spans. Sill pillars are preplaced Cemented Rock Fill (CRF). The top down access achieved through the southern access has resulted in the removal of the small area of bench stoping contained in the previous reserve (DFS) and production target (updated DFS).
The LHOS method employed has been designed to comply with the geotechnical requirements proposed all minimum mining width, dilution and ore recovery assumptions are consistent with those used in the DFS with the exception that Ore Drive sizes have been reduced to 4.0mW x 4.0mH.
EganStreet have developed a detailed mine production schedule. The mining sequence commences with the excavation of the boxcut before development commences and proceeds to the 1296mRL, this allows the establishment of primary ventilation and the second means of egress. From the 1296mRL development continues to the southern mining area allowing stoping to commence from the top down. Development to the north also commences at this time, this allows the breakthrough into the existing decline to occur and the second intake airway to be established before the central production area is brought online.
Mobile fleet equipment requirements have been cross-checked with equipment fleets proposed by the mining contractor. Equipment productivities remain the same as the assumptions used in the DFS and updated DFS with the exception that initially the maximum development advance rate for the decline heading was set to 4.6m/d as per the DFS/Updated DFS, once the decline splits North and South, the maximum decline advance rates was reduced to 3.5m/d. A maximum rate of 2.5m/day was used for all other development; this is reduced on the 3.3m/day used in the DFS.
Processing assumptions are based on the construction of a stand-alone 200ktpa throughput CIL plant onsite as detailed in the DFS (July 2018) and subsequently updated in the Updated DFS (February 2019). Plant recoveries were estimated using a “floating” recovery based on copper grade as per the Updated DFS, the copper grade was also used as a basis for varying cyanide consumption (also detailed in the Updated DFS). Life of Mine recovery exclusive of ore sorting based on the reserve is 94.3%. Processing related capital and operating costs are stated in section 6 and section 7.
Capital costs have been estimated on the same basis as the Updated DFS. Key capital costs were based on the DFS and then subsequently revised (as detailed in the updated DFS), as a result of competitive tender processes, these include:
- The Process Plant;
- Power Infrastructure; and
- Surface Infrastructure (including camp and office facilities)
The initial capital cost is estimated at $39.0 million (inclusive of contingencies of $3.6 million). In addition, $12.3 million for pre-production working capital (pre-production operating costs offset by initial gold sales) has been included. Expenditure of $2.9 million required for rehabilitation of the existing decline has been deferred into the second year of the mine life and now occurs outside the pre-production period.A breakdown of the estimated capital costs are detailed in Table 5:
Changes in the capital cost from the Updated DFS result from a reduction in the pre-production mining period as well as the simplification of the mine design. The updated mine design reduces total physicals required to be complete before production can commence, this impact is two-fold both reducing total cost but also reducing the time to first production (with an associated offset of fixed costs). In addition, the updated (simplified) design allows for the removal of two 4.5m diameter raisebored airways saving approximately $1.6m.
The operating Costs estimate basis is described in the DFS, this was subsequently updated in the Updated DFS to include the impacts of the LNG fired power station and new mining contractor costs resulting from the commencement of a competitive tender process. The reserve carries over the costs associated with the LNG fired power plant and also utilises the same mining contractor input costs, however total costs have been re-estimated based on the updated mine design and schedule. Operating costs are subdivided into mining, processing, site services, royalties and sustaining capital expenditure. The operating costs have been determined to a ± 15% level of accuracy. A breakdown of the operating cost estimate is shown in Table 6.