The company has defined three deposits — Theia, Eos and Hestia – with resources of 1.26 million ounces at a discovery cost of just A$17 per ounce over just three years.
“It has been a fertile tenement package despite small size,” Ducler said,
The scoping study posits the development of a 2.5 million tonne per annum development for $191 million, with production of 100,000ozpa over the first seven years, and 41,000ozpa at 0.5gpt for the last few years.
All-in sustaining costs are estimated at $1648/oz. Assuming a $2750/oz gold price, it generates $740 million free cashflow, but that is closer to $1 billion at today’s spot price.
Ducler said the study demonstrated Mandilla’s bona fides as a simple, low-risk development, and while the company is now embarking on a prefeasibility study, he’s not sure Astral will build the project, or if it will be snapped up.
“I have made no secret of the fact there is 30Mtpa of processing capacity in the region, and with 15Mtpa more being installed I think some of the majors are going to struggle to fill their mills,” he said.
“Free milling, open pittable deposits the scale of Mandilla simply don’t exist in the Kalgoorlie-Kambalda region, so this project will be attractive, but we’re going to keep running to grow the resources.”
While he’s comfortable with the scoping study figures, he’s awake to the capital cost creep that often comes as feasibilities advance, but believes the upside at Mandilla and its nearby Feysville project can offset any issues.
Feysville has a small 116,000oz resource but since that was announced it has completed some 55,000m of drilling, so the potential for growth is clear, especially with the recent Kamperman discovery at Feysville.
Just nine holes have been drilled into the prospect, but four have delivered bonanza intercepts.
The more higher-grade mineralisation Astral can define, the better Mandilla’s economics will become.
The initial mine plan – 11 years with a payback of less than 12 months – will start processing lower grade ore from year three, around 0.6-0.8gpt, but if it can keep that in stockpiles and process 2gpt ore from Kampervan it will dramatically improve earnings.
“Our costs are covered, the business will be cashflow positive, and if get can put 2gpt material through the mill it will generate $200/t revenue instead of $60/t.”
Its drilling at Mandilla is typically shallow, largely focused on open pittable material, but many holes end in mineralisation, so the depth potential remains wide open.
A structural review could also help define more prospective areas.
