PERTH (miningweekly.com) – ASX-listed Gascoyne Resources on Thursday revealed that its Dalgaranga gold project, in Western Australia, would require a capital investment of around A$75-million to develop a 2.5-million-tonne-a-year operation.

A prefeasibility study (PFS) into the operation considered the development of two openpit mines along with a new conventional semiautogenous grinding mill circuit, and a gravity and carbon-in-leach processing plant with a throughput of 2.5-million tonnes a year.

Based on the current resource of 23.7-million tonnes, grading 1.4 g/t gold for 1.05-million ounces, the Dalgaranga gold project was expected to deliver an initial 547 000 oz of gold over its six-year mine life, with production estimated at 104 000 oz/y.

The PFS estimated that the project would have a net present value of A$193-million and an internal rate of return of 90%, while life-of-mine all-in sustaining costs had been estimated at A$913/oz.

“The completion of the PFS and calculation of the initial ore reserve for the project is a considerable step forward for the company. It confirms Dalgaranga will be a low-cost and high-margin Western Australian gold development with very robust economics,” said Gascoyne MD Mike Dunbar.

He noted that the compelling technical and economic outcomes of the PFS had led the Gascoyne board to immediately approve the start of a feasibility study, which was earmarked for completion by the end of 2016, allowing for an investment decision in early 2017.

“While the PFS outlines a very profitable project that will produce over 100 000 oz/y for around six years, that is just the start for the project. Significant exploration potential still remains, which could add to the mine life and further enhance the project economics.”

Dunbar said that the project’s exploration potential had been highlighted by the discovery of the Hendricks gold mineralisation, less than 2 km east of the proposed processing plant site.

Exploration at the Hendricks discovery was continuing.