Meeka Metals (ASX: MEK) has secured mine dewatering and clearing permits to step closer to first gold at its 100 per cent-owned Murchison project in Western Australia’s Mid West region, with the company now expecting mining permits early in September.
Management says it has drawn down on $1.34 million of a $2.2 million secured bridging loan facility to purchase the camp and associated infrastructure at the operation. With a resource of 1.2 million ounces grading 3 grams per tonne gold and a reserve of 305,000 ounces running at 3.8g/t, the milestones are another essential part of unlocking future gold production.
Installation of site services is currently in train, paving the way for the more significant infrastructure development that is due to start next month. The $2.2 million secured bridging loan that was confirmed last month has been vital in funding the current phase.
The $1.34 million draw-down was used to build a 116-person camp, a 200-person change house and an ablutions block for the Andy Well mining centre, and a fully-equipped administration complex and a mining office for the Turnberry mining centre, in addition to a 110,000-litre fuel storage tank.
Receiving these approvals is a significant milestone. With just one permit pending, we're on the verge of transitioning from being development-ready to full project execution.
Meeka Metals Managing Director Tim Davidson
A definitive feasibility study (DFS) completed in May concluded that, with a mine life of nine years the project will produce 64,000 ounces of gold a year using a cut-off grade of 3.7g/t. Using the current elevated Australian gold price that is sitting north of $3530, payback from the operation will be considerably shortened to eight months – in stark contrast to the 22 months envisaged in the earlier feasibility estimate in July last year.
The capital costs for the project focus on recommissioning the 500,000 tonnes per annum Andy Well carbon-in-leach processing plant, which has an impressive average metallurgical recovery rate of 97.5 per cent. During its projected nine-year mine life, the plant is expected to process 3.4 million tonnes with an average feed grade of 3.7g/t gold.
Out of the estimated $44 million in start-up costs, $10 million has been earmarked for site infrastructure and camp facilities, $21 million is designated for recommissioning the Andy Well plant, $7 million is allocated for open pit mining and $4 million is set aside for capitalised operating costs. An additional $3 million will be reserved for contingencies.
Previously owned by Silver Lake Resources, the Andy Well deposit saw its first mining activity in September 2012, leading to an inaugural gold pour by February the following year. However, the project entered a care and maintenance phase in September 2017 due to a decline in gold prices to $1500 per ounce.
In February 2021, Meeka then acquired both the Andy Well and the adjacent Gnaweeda gold projects, including the Turnberry and St Anne deposits, from Silver Lake.
The Murchison region has a rich history of multi-million-ounce gold discoveries in recent years, but it has a much longer history with the precious yellow metal first found in the area in 1892 – just seven years after the short-lived East Kimberley discovery that is regarded as the first gold discovery ever made in WA. The identity of the first discoverer remains uncertain, although two prospectors did collect 260 ounces of gold after receiving a nugget from an Aboriginal man known as “Governor”.
As the last remaining mining permits come through in early September and a $40 million debt facility for capital expenditure funding is signed off later this month, the path will clear for Meeka to push forward to first mining in January next year. With a substantial exploration upside still all to play for, according to the company, and a buoyant gold price, the timing for first production at Murchison is starting to feel pitch perfect.
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