EganStreet’s resource upgrade shows ‘significant upside’ at Rothsay, says Wendt
7th December 2018
Resources Rising Stars
Emerging gold company EganStreet Resources (ASX: EGA) has delivered a 13% increase in its high-grade Resource base from 401,000oz to 454,000oz, demonstrating the high-grade nature of its flagship Rothsay gold project in WA and its potential to deliver a low-cost, high-margin operation, says Sydney analyst Gavin Wendt.
A meeting with EganStreet Managing Director Marc Ducler has provided him with confidence that the company is “well on track” to successfully bring the Rothsay project into production, says Wendt.
Writing in Minelife newsletter, Wendt said the resource upgrade to 1.54 million tonnes at 9.2g/t for 454,000oz is a “very positive result”, with the Mineral Resource having now doubled since the company listed in 2016.
EganStreet’s Feasibility Study is based on production of 250,000oz over an initial 6.5-year mine life, with a pre-production CAPEX of $36.1 million, cash operating costs of A$941/oz and all-in sustaining costs (AISC) of A$1,083/oz.
“The latest Resource upgrade has been generated at a discovery cost of $30 per ounce, with the overall discovery cost since EGA’s listing in 2016 averaging $35/oz,” he said.
“The results clearly demonstrate the significant upside to the Rothsay deposit, and they support the company’s strategy of targeting the area below the historical workings, as well as along strike north and south as the focus for the re-development of the high-grade mine.
“The increased Resource estimate and strike extensions to the north and south will feed into an updated mine design and Ore Reserve, which is now underway.”
The new Mineral Resource now extends approximately 200m to the south, with the results being incorporated into an updated mine design and schedule which anticipates a second portal and decline to the ore strike extension.
“This has the potential to give the project greater flexibility, earlier ounces and higher sustained production rates.”
Wendt says EganStreet is exploring “a range of options that could help turn its project into a production reality.”
“It has already reported positive interest from prospective lenders, but there will also likely be potential regional corporate opportunities that will present themselves, which could substantially reduce both financing and operational risks.
“The period from now until early 2019 will be a busy period of news-flow. EGA will accordingly remain firmly on our watch-list.”
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