Brightstar Resources Ltd (ASX:BTR) has fielded a positive scoping study for its wholly-owned Menzies and Laverton gold projects in Western Australia, plotting a low-cost pathway to gold production.
BTR will target initial production of about 5.28 million tonnes at 2.0 g/t gold for 322,617 ounces over the current 8-year life of mine (LoM), with net present value (NPV8) of about $103 million at a gold price of A$2,900 per ounce.
The scoping study also laid out an internal rate of return (IRR) of about 79%, a payback period of 1.5 years and an all-in sustaining cost (ASIC) of about $2,041 per ounce.
It also outlines average recovered ounces of +45,000 ounces per annum in the first five years, with average LOM production of ~40,000 ounces per annum and strong potential to increase production profile and mine life.
The staged mine plan in the study provides early cashflow from the Menzies Gold Project to organically fund the restart of the Laverton Gold Project.
Becoming a gold producer
“It is pleasing to announce the results of our scoping study, which outlines a low-capital pathway to production from our assets,” Brightstar Resources managing director Alex Rovira said.
“We have delineated four key deposits within our Menzies & Laverton gold projects which will deliver an executable 8+ year LoM plan which will result in Brightstar becoming a meaningful gold producer in the WA Goldfields.
“The staged mined development has been optimised to minimise up-front capital costs, utilising operational cash flow to organically fund the refurbishment of the Laverton processing facility to minimise equity dilution and limit onerous debt and/or hedging exposure associated with large capex builds magnifying commissioning risks.”
Brightstar has calculated the total pre-production costs to be about $22 million, intending to begin with the rapid restart of the Menzies mine with a target of first gold within six months and first gold from the Laverton project within nine months.
Minimising risk
“The mine plan has been designed to minimise 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,” Rovira continued.
“More importantly, when assessing key financial metrics for the return on investment in a challenging capital environment, the development of these gold projects is peer-leading in the WA gold development sector.
“Key profitability metrics such as internal rate of return (IRR) and a ratio of the net present value divided by the capex (NPV/capex) are exceptional and speak to the development ethos being employed by Brightstar to ensure that this project is appropriately fundable and mitigating all operational risks where possible.
“Whilst we’re pleased to release the results of our scoping study and are progressing with a pre-feasibility study, we continue to advance exploration efforts across the portfolio with the intent of finding additional ounces to add to the mine plan.
“We look forward to continuing our dual focus of development and exploration in the Goldfields and building WA’s next gold producer.”
BTR believes its scoping study highlights strong returns on investment for its gold production strategy, offering a solid NPV/capital expenditure ratio of about 4.6x and a capital intensity of just $559 per ounce.