Development

In March 2016 White Rock announced an update to scoping studies at Mt Carrington to take into account the softening in mining industry construction activity and labour costs, and the continuing strength in the A$ gold price.

White Rock believes the current A$ gold price, reaching and exceeding A$1,600 per ounce, presents real upside to the Project, and especially when coupled to the development of its silver resources. The 2016 update demonstrates a significant uplift in Project economics when new and relevant cost inputs and an improved A$ gold price are used, and the silver resources added along with the gold-first production profile.

Study Summary at A$1,600/oz gold price and A$22/oz silver price:

  • 7 year open pit mining operation with production of 111,000 oz gold and 6.7M oz silver
  • 8Mtpa floatation and CIL processing circuit
  • Average open pit strip ratio of 2.0 : 1
  • Free cash flow of A$100M
  • A$60.6M NPV10 and IRR of 103%
  • C1 cash cost of A$754/oz gold and A$10.40/oz silver
  • Low Capital Costs of $24.2M
  • Capital payback within 10 months

Of note:-

  • The Project has excellent exposure to both gold and silver as revenue streams,
  • The strategy of mining the Project’s gold resources first provides the quick cash flow to pay back the initial capital within 12 months,
  • Two of the gold resources have already had oxide material removed by historic mining, providing the Project with a walk-up start to mining once construction has been completed,
  • The silver resources are mined from Year 4 on, potentially allowing time for the silver price to re-bound from its currently relatively low levels,
  • The flow sheet considered in the Scoping Study allows the gold and silver to be concentrated by flotation. For the initial gold-dominant deposits, gold is then extracted in a standard CIL circuit. For the silver-dominant deposits, the silver-rich flotation concentrate is upgraded to a saleable precious metal concentrate. This strategy reduces the effects of copper in the ore, which was a major issue for the previous operators.
  • The free cash generated (~A$100M (undiscounted)) would underwrite further exploration on the Project’s tenements, where at least six drill-ready targets are identified which could extend the initial 7-years mine life.

All the deposits considered for development are amenable to open-pit mining with mineralisation commencing from surface or at the base of the current (oxide) open pits.

The deposits comprise predominantly sulphide-hosted gold and silver mineralisation. The processing route for the gold-dominant Resources has been selected and optimized to enable the most efficient recovery of gold. The optimized pathway consists of a standard milling and floatation circuit producing a rougher concentrate which is subsequently reground and treated in an intensive leach process to recover the precious metals.

The proposed processing flow sheet allows for later modification to treat the silver resources from Lady Hampden, White Rock and Silver King with minimal additional capital required. The original scoping study completed in 2012 identified production of a saleable silver concentrate as the most profitable processing pathway for the silver rich deposits, which would only require upgrading of the floatation circuit to enable a cleaned concentrate to be produced.

The proposed processing flow sheet will be suitable for future development of the Guy Bell and Red Rock gold resources, not yet included in the Scoping Study.

Current site infrastructure at Mt Carrington includes granted mining leases covering 1,000Ha, a 1.5Mt tailings storage facility with capacity for expansion, a 750ML freshwater dam, a site exploration and mine administration office, a water treatment plant with 0.8ML/day output capacity, connection to the NSW State high voltage power grid which traverses directly through the Mining Leases plus existing haul roads for the gold deposits and previous processing plant foundations. Overall the existing infrastructure underpins a substantial cost saving on upfront capital expenditure, estimated to be in the order of ~A$20M.

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Mt Carrington Site Infrastructure Layout – Stage 1 Strauss and Kylo Development.

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Mt Carrington Site Plant Layout.

An upfront capital cost of $14.5M has been estimated for a proposed 0.8Mtpa floatation and CIL processing plant, and $6.1M for the additional site infrastructure and pre-mining development. The current market for second hand plant in Australia provide possible short term opportunities to reduce the overall  upfront capital required for stage 1, with several recent published examples of appropriate plant in the order of $2.3M. Sensitivity analysis indicates a 24% increase in project NPV where capital costs are reduced by 20%.

Site infrastructure

The positive results for the 2016 scoping study update strongly support the implementation of Feasibility Studies and future development of the Mt Carrington project. White Rock is continuing with baseline studies implemented in 2013 for use in preparation of an Environmental Impact Statement (“EIS”). It is anticipated that there will be sufficient baseline data to submit an EIS in 2016. In late 2013 the Mt Carrington Conceptual Project Development Plan was approved by the Department of Trade and Infrastructure, which represents the first step in the regulatory process for project development consent.

A number of pre-development optimisation activities are underway in preparation for feasibility studies to be completed in 2015 with development targeted in 2015/16.

More detailed commentary on the outcome of the scoping study can be viewed in the ASX release dated 29 March 2016 and earlier scoping study announcements dated 16 September 2014 and 31 July 2012.