South African focused gold developer, Theta Gold Mines Limited, has announced its Maiden Underground Prefeasibility Study (PFS) for the Beta, Frankfort, and CDM mines, all of which form part of the Central Northern area and now collectively referred to as TGME Underground Project.
Chairman of Theta Gold, Bill Guy, said the TGME Underground PFS ‘clearly demonstrates’ that the extensive flat high-grade narrow reef systems of East Transvaal Goldfield can be mined economically, and modern mechanised mining and metallurgy can deliver strong project economics.
“Now that the company has generated a PFS for the TGME Underground Project, we can optimise our development strategy based on confident numbers. At a 63 per cent conversion ratio, Theta Gold still has 3.5 million oz Au of underground resources to develop in order to extend LoM and increase production into the future,” he said.
Theta Gold further states that it has demonstrated, through the first phase underground PFS, excellent project economics for what it believes to be only a small portion of the underground resource.
“In real terms, we have only completed the study on 16 per cent of the total of 4.5 million ounces of gold in the underground mineral resource.”
The company said that this is a positive early step to developing the goldfield, and noted that the initial study focused on the easy access of 684,000 oz Au in the Measured and Indicated categories of the TGME Underground Resource for the Beta, Frankfort and CDM areas. A further 3.5 million oz Au of inferred resources is available to be upgraded to the Measured and Indicated resource category and potentially a portion could be converted into mining reserves.
Previously the miner announced a five-year plan, which targets 4 mine developments, Theta open-pit Starter Project (MR83 only), Theta open-pit extension (MR341) and the Rietfontein and Beta underground mines. This 4-mine strategy provided it with a clear growth plan with a combined open pit and underground resource of over 2.75 Moz. The recent detailed work that was conducted on Frankfort, Beta and CDM underground mines, together with Theta Phase 1 OP, has further enhanced this strategy.
The company will continue to build up its Mining Reserves during the year by progressing Rietfontein and other mines through to PFS level, while concluding detailed designs for the Phase 1 UG Project. Mr Guy said the team will complete the Rietfontein PFS in Q3 of this year.
“The Mining Reserve from Rietfontein can then be brought into the updated PFS to further increase the production profile.”
“At Theta Gold, the resource pipeline into the future is strong, and the scale of the potential resources and the geology in South Africa should not be underestimated. The Company will soon be a key player in the South African mining industry, a sector that has produced more tonnes of gold than any other country when measuring gold bullion tonnage. Over 40 per cent of the world’s gold has come from the small corner of South Africa that we call home.”
“Due to the shallow, high grade and on-reef development characteristics of the ore, our AISC of US$905 per ounce of gold sits in the bottom quartile of costs for South Africa. At a forecasted average US$1,570 gold price, EBITA is US$241 million from revenue of US$545 million and the NPV is US$91 million; all based on a very small proportion of the overall project area. The CAPEX is modest and staged and production peaks at 70,000 oz Au per annum.
Below are some key highlights from the PFS for the TGME Phase 1 Underground Project, which excludes the open pits. All numbers in USD and financials based on forecast gold price of average USD$1,570/oz and ZAR/USD exchange rate of 15.9.
- Pay-back period from first gold 13 months
- Pay-back period from start of mining 22 months
- 419,000 ounces (oz) of gold (Au) delivered to plant over initial Life of Mine (LoM)
- By the third year, production over 60,000 oz Au/year (recovered)
- LoM is 7.67 years
- US$241.2 million EBITDA over LoM
- Internal Rate of Return (IRR) 82 per cent
- US$91.2 million Net Present Value (NPV)
- US$905/oz Au all-in sustaining cost (AISC) over LoM, bottom quartile for South Africa producers
- Total LoM Capital Expenditure (CAPEX) US$79 million includes:
- Peak CAPEX first 3 years US$37M – Oxide and Backfill Plant and Beta Mine development
- Year 4 US$27M Sulphide Circuit and Frankfort and CDM Mine development
- US$15M of remaining capital to develop and sustain operations