Medallion Metals Limited (ASX: MM8) (Medallion or the Company) is pleased to report the results of the initial Scoping Study for the Ravensthorpe Gold Project (RGP) with processing at Forrestania (the Project) (Study).
In August 2024, Medallion entered into an Exclusivity Agreement with IGO Ltd (ASX: IGO) that granted the Company a period of exclusivity to negotiate the acquisition of certain assets of the Forrestania Nickel Operation (FNO), including the Cosmic Boy Process Plant (Cosmic Boy) and associated infrastructure (Proposed Transaction).
Medallion has completed the Study premised upon the completion of the Proposed Transaction. The Study results confirm the Project as a technically and commercially robust development opportunity, generating strong cashflows and offering returns on investment which are attractive relative to the risks identified through the Study process.
All dollars are Australian Dollars ($) unless stated otherwise. Study Highlights: Initial production inventory of 2.7Mt @ 3.9 g/t Au & 0.6 % Cu for 342 koz Au & 16 kt Cu contained Total initial metal production of 336 koz Au & 13 kt Cu Mine life 5.5 years generating pre-tax cashflows averaging $90 million per annum under base case assumptions Pre-tax free cash flow of $498 million assuming A$3,615/oz Au, A$5.54/lb Cu (base case) Pre-tax free cash flow of $637 million assuming A$4,000/oz Au, A$6.15/lb Cu (spot) Forecast average All-In-Sustaining-Cost (AISC) of A$1,845/oz of Au produced (net of by-product credit) Total pre-production capital cost of $73 million inclusive of mine establishment and process plant modifications Pre-tax NPV10 of $329 million & IRR 129% (base case) Pre-tax NPV10 of $429 million & IRR 169% (spot) Payback period: 12 months (base case), 9 months (spot) Establishment of proven & industry standard process route of gravity-flotation-CIL (Deflector analogy) at Forrestania to deliver high gold recovery (98%) and copper recovery (80%) to saleable products over the Project life Significant potential to enhance Project returns through increased throughput rate and mine life extension Potential Upside Drivers: RGP Mineral Resource conversion and extensions (15km drill program well advanced); o Initial production inventory represents 44% of existing sulphide Mineral Resource (gold content) o Deposit shallowly drilled, Mineral Resource extends to 330 metres, deepest hole 415 metres below surface Commercialisation of RGP oxide/transitional Mineral Resources (10.3 Mt @ 1.6 g/t Au for 520 koz Au)1), Trilogy deposit Mineral Resources (5.6 Mt @ 0.9 g/t Au, 54.4 g/t Ag, 1.2 % Cu, 2.4 % Pb, 1.4 % Zn)2 Redeployment of surplus mine infrastructure at Forrestania to Ravensthorpe to reduce pre-production capital Ability to commercialise gold deposits within economic trucking distance of Cosmic Boy
Next Steps: Medallion is well advanced through a 15 thousand metre drill program to grow the high-grade sulphide underground resource at RGP in terms of both size and confidence. Assay results received to date are confirming the geological model in terms of grade and thickness. The Company has now progressed to the next key approvals stage with RGP referred under the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and expects to have clarity on the status of RGP under the EPBC Act in early calendar 2025. Negotiations with IGO in relation to the Proposed Transaction continue to advance in a positive fashion. Subject to the satisfactory completion of these negotiations, Medallion will look to complete a Bankable Feasibility Study (BFS) and make a Final Investment Decision (FID) by the third quarter of 2025.
Managing Director, Paul Bennett, commented: 'The study demonstrates a unique and compelling opportunity to bring the Ravensthorpe mineral resource together with the established infrastructure at Forrestania to achieve a low capital, low risk and rapid pathway to gold and copper production in a very strong price environment. In addition, re-establishing gold production capability at Forrestania, a historically significant gold province, provides an exciting platform for future growth. In parallel with continuing exclusive negotiations with IGO to acquire Cosmic Boy, we're advancing environmental approvals for an underground development at Ravensthorpe and are well advanced with a 15km drill program to grow the size and confidence of the underground resource and to support further metallurgical test work. We continue to progress apace toward development at Ravensthorpe and we think we're well placed to make near term gold-copper production and generation of strong cashflows a reality'.
CAUTIONARY STATEMENT
The Scoping Study referred to in this announcement has been undertaken by Medallion Metals Limited to evaluate the technical and commercial viability of establishing an underground mining operation at its Ravensthorpe Gold Project and trucking of the mined material for processing at a modified Cosmic Boy Processing Plant, located in the Forrestania region of Western Australia (the Project). The Study includes a preliminary assessment of mining the sulphide component of the Ravensthorpe Gold Project Mineral Resources and the engineering requirements to modify the Cosmic Boy Processing Plant to treat that material to yield saleable products. This Study is based on high level technical and economic assessments (+/- 35% accuracy) that are not sufficient to support the estimation of Ore Reserves for the Project or for an investment decision to be made. Further evaluation and appropriate studies focussed on mining and processing are required before Medallion will be in a position to advise of any re-estimation of Ore Reserves for the Project or to provide any assurance of an economic development case. The Study is based on the material assumptions outlined in this announcement, including assumptions about the completion of the proposed transaction with IGO Limited announced to ASX on 8 August 2024 whereby the Company acquires Cosmic Boy and certain infrastructure (Proposed Transaction) and the availability of development funding. Investors should note that there is no certainty that Medallion will complete the Proposed Transaction or be able to raise the required amount of development funding when it is required. It is also possible that development funding may only be available on terms that are dilutive to or otherwise effect the value of Medallion's existing shares. It is also possible that Medallion could pursue other value realisation strategies such as a sale, partial sale or joint venture of the Project. This could materially reduce Medallion's proportionate ownership of the Project. While Medallion considers that all material assumptions are be based on reasonable grounds, there is no certainty that they will prove to be correct or that the outcomes indicated by the Study will be achieved. The production target and forecast financial information referred to in this announcement comprise Indicated Mineral Resources (approximately 71%) and Inferred Mineral Resources (approximately 29%). There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target will be achieved. Given the uncertainties involved and listed above, investors should not make any investment decision based solely on the results of the Study.
Overview & Key Outcomes
The Study considers the development of an underground gold and copper mine at the Kundip Mining Centre (KMC), a subset of the broader RGP, targeting the sulphide component of the existing Mineral Resource. The Study benefits significantly from work previously completed as part of the Pre-Feasibility (PFS) that considered a standalone gold and copper mining and processing operation at RGP, processing oxide, transitional and sulphide gold and copper material to produce saleable products3. The PFS outlined a production inventory of 13.9Mt @ 1.8g/t Au & 0.2% Cu, producing 777koz of Au and 16kt of Cu for sale over a 9-year life. The Company will take advantage of many elements of the PFS work in order to inform approval applications and to enable rapid transition to development. The underground mining method selected is a combination of longhole and incline benching in a top-down sequence which minimises working capital by taking advantage of the competent ground conditions. Application of conservative modifying factors yields a production inventory of 2.7Mt @ 3.9g/t Au & 0.6 % Cu for 342 koz Au & 16 kt Cu contained. The production inventory contains Inferred Resources representing 29% of the overall tonnage mined and processed over the Life of Mine (LOM). Inferred resources average of 8% of overall tonnage mined and processed over the first 12 months of the Project life, and 18% over the first 24 months. Mined material is delivered to a surface Run of Mine (ROM) pad and then trucked by 99 tonne road trains from KMC, via Ravensthorpe and Lake King to FNO, approximately 170 km by public roads. Material will be processed at a rate of 0.5 Mtpa via a standard Gravity-Flotation-Carbon-in-Leach (CIL) process route, yielding a mine life of approximately 5.5 years based upon the production inventory sourced from KMC. LOM gold recovery is estimated at 98%. LOM copper recovery is 80%. Modifications to the Cosmic Boy processing infrastructure will be required to process KMC material to achieve the throughput rates and recoveries modelled in the Study. GR Engineering Services Ltd (GRES) was tasked with designing modifications to the Cosmic Boy infrastructure to enable KMC material to be treated at the specified throughput rate to achieve target metallurgical recoveries. GRES is well placed to advise on these matters, having designed and constructed the Cosmic Boy plant and its subsequent modifications, as well as overseeing the majority of KMC metallurgical testwork and process engineering that has informed studies completed by Medallion to date. Key modifications include installation of additional grinding capacity, installation of a gravity and CIL circuit, elution and gold recovery circuits. The outcome will be the establishment of an industry standard processing flowsheet capable of recovering gold, copper and silver to saleable products (concentrate and dore). Pre-production capital expenditure is estimated at $73 million, comprising: $37.0 million invested at FNO to construct gold and copper ore processing capability at Cosmic Boy, and a further $34.3 million at KMC to establish underground operations and ancillary infrastructure. An additional $150.1 million of sustaining and other capital expenditure is anticipated over the Project life, principally comprised of underground capital development at KMC, tailings storage facility lifts at FNO and Project closure costs. All-In Sustaining Costs (AISC)4 are estimated at A$1,845 per ounce of gold sold over the LOM net of by-product credits (copper and silver). The financial analysis is at the Project level and is on a pre-tax, un-levered basis. Study results confirm a technically and commercially robust development opportunity offering returns on investment which are attractive relative to the risks identified through the Study process. A range of opportunities have been identified to enhance Project returns. KMC deposits are shallowly drilled and open in multiple directions. Potential extensions to the deposits not considered in the Study represent clear opportunities to increase the Project production profile. Optimisation of cut-off grade, underground development layout and fill strategy all present opportunities to increase efficiency and recovery of production inventory. Redeployment of surplus mine infrastructure from FNO also represents significant potential cost savings to establishing and sustaining underground mining operations at KMC. In conclusion, bringing KMC Mineral Resources together with the established infrastructure at FNO presents a strong investment case under base case assumptions. Multiple opportunities exist to enhance that investment case by advancing the growth initiatives articulated. Strategically, the establishment of gold processing infrastructure at FNO has the potential to unlock value from gold deposits located within trucking distance of Cosmic Boy. In an elevated Australian dollar gold price environment, the combination of KMC and FNO is a unique, low capital intensity, near term gold-copper development opportunity within Western Australia with multiple organic and inorganic growth pathways.
Completion of all work streams to Project FID is dependent upon securing funding on terms acceptable to the Company. Exclusive negotiations to acquire Cosmic Boy from IGO continue to advance positively. Subject to completing the Proposed Transaction and in order to minimise the timeframe to reach a Project FID, Medallion is advancing several work streams in parallel. The process of seeking primary legislative approvals which would allow mining to commence at RGP and ore haulage to Forrestania for processing has commenced. Medallion has lodged a referral under the EPBC Act, the Minister's determination as to whether the Project requires assessment, and if so the level of assessment, will be critical for establishing the timeline for Project FID. In order to support the conversion of Inferred Resources and to gather sample for further metallurgical testwork, a combined Reverse Circulation (RC) and Diamond Drill (DD) program is significantly advanced. Medallion anticipates having completed approximately 15,000m of drilling early in calendar year 2025 and expects the results will grow the underground MRE in terms of size and confidence and further de-risk the mine plan considered in the Study. An updated underground MRE is anticipated to be released in the first half of 2025. The completion of a BFS in combination with the availability of development finance and a range of other factors will inform the Board's assessment of a Project FID.
Contact:
Tel: +61 8 6424 8700
Managing Director
Email: info@medallionmetals.com.au
PREVIOUSLY REPORTED INFORMATION
References in this announcement may have been made to certain ASX announcements, including exploration results, Mineral Resources, Ore Reserves, production targets and forecast financial information. For full details, refer to said announcement on said date. The Company is not aware of any new information or data that materially affects this information. Other than as specified in this announcement and other mentioned announcements, the Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement(s), and in the case of estimates of Mineral Resources, Ore Reserves, production targets and forecast financial information that all material assumptions and technical parameters underpinning the estimates in the relevant announcement continue to apply and have not materially changed other than as it relates to the content of this announcement. The Company confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original announcement
INCLUSION OF INFERRED MINERAL RESOURCES
The production target and forecast financial information referred to in this announcement is primarily underpinned by Indicated Mineral Resources (approximately Indicated 71% and approximately 29% Inferred Mineral Resources). The Company draws attention to there being a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target will be achieved. Accordingly, the Company has scheduled production such that Inferred Mineral Resources do not feature as a significant proportion of the early stages of the 73 month mine plan. Inferred Mineral Resources represent approximately 8% of the material mined over the first 12 months and 18% of the material mined over the first 24 months respectively. The Company is satisfied that the Inferred Mineral Resources included in production target are not the determining factors of the viability of the Project.
COMPETENT PERSONS STATEMENTS
The information in this announcement that relates to Exploration Results is based on, and fairly represents information and supporting documentation prepared by Mr Paul Bennett, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Bennett is an employee and security holder of Medallion Metals Ltd. Mr Bennett has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Mineral Resources and Ore Reserves' (the JORC Code). Mr Bennett consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this announcement that relates to production targets, assumptions on Modifying Factors and evaluation of other relevant factors is based on, and fairly represents information and supporting documentation that has been compiled under the supervision of Mr Paul Bennett BEng (Mining), a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Bennett is an employee and security holder of Medallion Metals Ltd. Mr Bennett has reviewed and approved the technical content of this announcement. Mr Bennett has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Mineral Resources and Ore Reserves' (the JORC Code). Mr Bennett consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The Mineral Resources underpinning the production target disclosed in this announcement have been prepared by Competent Persons in accordance with the 2012 Edition of the 'Australasian Code for Reporting of Mineral Resources and Ore Reserves' (JORC Code). For further details regarding the Mineral Resources underpinning the production target refer to the Company's ASX announcements dated 16 January 2023, 13 February 2023 and 8 August 2024.
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