Rox Resources told the ASX on Wednesday the study estimated Youanmi could have average annual production of 103,000 ounces of gold at 4.5g per tonne for 786,000oz across a mine life of 7.7 years.
Rox said the pre-production capital costs of $245m included $191m for building a 750,000 tonnes per annum processing plant and site infrastructure, and $39m for underground development.
With an all-in-sustaining cost of $1676/oz, and using an assumed gold price of $3100/oz, the study said pre-tax cash flow was $855m, and post-tax cash flow $597m.
The study put a pre-tax net present value on Youanmi of $486m, with post-tax NPV being $322m, and the respective pre- and post-tax internal rates of return figures were 42 per cent and 33 per cent.
This would lead to a payback period of 2.9 years pre-tax and 3.3 years post-tax.
The study was based on a mineral resources estimate of 16.2Mt at 4.4g/t for 2.3Moz of gold, with the first four years based on 81 per cent of the resource being in the indicated category, and 19 per cent inferred.
The numbers improve considerably when a gold price of $3500/oz is assumed, with pre-tax NPV being $694m, and a post-tax NPV of $468m.
Rox has owned 100 per cent of the project since acquiring Venus Metals’ 30 per cent share in a scrip deal in July last year.
Rox Resources managing director Robert Ryan said at current spot prices Youanmi would deliver an operating margin of nearly $2000/oz.
“The high-grade, high-margin nature of the project results in very compelling financial metrics and a short payback of less than three years at a base case gold price of A$3100/oz,” he said.
“The project financials really move up another gear when run at the current spot price of $3500/oz, with a life-of-mine free cash flow of $1.2 billion, meaning on average that the project will deliver more than $150m in free cash flow per annum.
“Following on from the substantial upgrade in the quality of the Youanmi mineral resource — in particular the underground indicated resource announced earlier this year — a high-grade maiden ore reserve has been declared as part of the PFS of 546,000oz at 4.4g/t.
“There is also tremendous upside in the project with the underground resource remaining open down-dip and along strike and near-mine exploration targets of between 1.1Moz and 1.8Moz, which have the potential to increase the annual production rate and mine life of the project if we are successful in converting these ounces into resources and ultimately ore reserves.”
Mr Ryan said the company was targeting the completion of a definitive feasibility study next year.
“In parallel with this, we have a huge amount of potential upside to seek to unlock for our shareholders, starting with the goals of converting more inferred resources to indicated, conversion of the substantial exploration targets to JORC Resources and near-mine and regional exploration,” he said.
“This work will unfold as part of our dual-track growth strategy.”
Rox said Youanmi has produced an estimated 667,000oz of gold at 5.47g/t since its discovery in 1894 during three main periods: 1908 to 1921, 1937 to 1942 and 1987 to 1997.
The company said the last parcel of ore mined underground at Youanmi in November 1997 was processed at a grade of 14.6g/t.
