PERTH (miningweekly.com) – Site work on the Nicolsons gold project has started, after joint venture (JV) partners Bulletin Resources and Pacific Niugini completed their funding packages.

Bulletin told its shareholders on Friday that it had executed loan documentation with the Commonwealth Bank of Australia, providing the company with the necessary funding to meet its share of redevelopment finances.

The loan finance obtained would cover about 77% of Bulletin’s funding requirements to meet its 20% share of expenditure, and was obtained as a gold prepayment facility.

The A$2.3-million facility would be repayable on the delivery of 1 705 oz of gold, with Bulletin also entering into a hedge facility for 3 695 oz of gold, at a fixed price of A$1 568/oz.

JV partner Pacific Niugini had previously secured its own funding over two tranches, including a one-for-four rights issue to raise A$3.92-million and a pre-pay gold facility of A$9.2-million with the Commonwealth Bank.

In addition, a gold hedge of 15 076 oz, at a fixed price of A$1 568/oz was also completed to underwrite the returns from the project through the funding repay period.

The ASX-listed company said on Friday that with the funding now in place for both JV partners, site work had started at Nicolsons with openpit dewatering and remediation of the openpit under way.

“We expect to cut the underground portal and commence plant refurbishment early in March, and plan to start production within six months,” said Pacific Niugini MD Paul Cmrlec.

The project was expected to have an initial four-and-a-half-year mine life, and would deliver an after-tax net profit of A$50-million, a net present value of A$42-million and an internal rate of return of 162%.

Existing infrastructure at the Nicolsons mine would allow Pacific Niugini to restart operations for a minimal capital injection of A$10.7-million, with the project targeting production of about 130 000 t/y from a small-scale underground mine at the base of the existing openpit operation.