One of Western Australia’s most historic gold mines is being prepared for a fairytale return after Westgold Resources secured approval to develop its Great Fingall mine near Cue.
Management has presented a conservative base case to produce 2.5 million tonnes of ore at about 5 grams per tonne gold for 383,000 ounces at an all-in sustaining cost of $1801 per ounce and it has now been green-lighted by the company’s board.
Between 1891 and 1929, Great Fingall yielded 1.2 million ounces of gold from 1.9 million tonnes of ore at a grade of 19.5g/t. Mining recommenced in 1995 using open-pit methods up until March in 1999, yielding 82,000 gold ounces from 1.8 million tonnes of ore.
Remarkably, no mining has been conducted on the underground extensions to the orebody for nearly a century.
Now, Westgold plans to begin developing the Great Fingall site early next quarter and has set its sights on first ore production in the first half of next financial year at its Tuckabiana mill, just 28km away.
Management says it de-risked the project last financial year with a major drill campaign targeting the area below the historic workings. In May, the company unveiled an all-encompassing upgraded mineral resource for Great Fingall of 4.3 million tonnes grading 4.3g/t for 588,000 ounces of gold – a 49 per cent increase to its previous estimate of 304,000 gold ounces.
Westgold’s revised geological model now shows the Fingall Reef splitting into two parallel reefs – Upper Fingall and Lower Fingall – resulting in an enhanced ounce-per-vertical-metre profile and more flexibility in mine design and scheduling.
Combined with the company’s nearby Golden Crown mineral resource of 194,000 ounces, its Great Fingall base-case development plan is outlined on a total resource of 782,000 ounces of contained gold.
Great Fingall is one of four +1Moz historic producing mines in Westgold’s portfolio and the commitment to its development underpins Westgold’s confidence in the Murchison region. At steady state it will be a long-life, high-grade, high-margin underground mine, producing +45,000oz a year, with first ore production in H1 FY25. Our base case is conservative and focuses on virgin reef extensions only. Even on this basis, the returns are compelling. Westgold Resources managing director Wayne Bramwell
Both the Golden Crown and Great Fingall mines, which are separated by about 700m along the Great Fingall dolerite, have hosted significant historic production, with more than 1.55 million ounces of gold mined since the late 1800s.
Two subsequent open-pit campaigns at Great Fingall since 1999, the last by Westgold in 2020, have produced a further 54,000 ounces of gold, leaving the pit floor 170m below surface, with underground decline access established.
Management says there is significant upside from high-grade flat structures and remnant ore that it will develop past as it pushes the decline to the virgin parts of the high-grade orebody. Those opportunities and the additional 250 vertical metres of reef depth extensions intersected by Westgold drilling, has not yet been included in the current evaluation or design.
The base case for Great Fingall uses conservative gold prices to establish a total revenue of $996 million using a gold price assumption of $2600 per ounce. With the precious yellow metal currently trading at about $2950 per ounce, Westgold could be looking at a decent return if that figure holds until first production at the mine late next year.
Then, everything old could be genuinely looking new again.
Is your ASX-listed company doing something interesting? Contact: office@bullsnbears.com.au