Low-cost gold producer Capricorn Metals is confident that its advancing work on the Mount Gibson mine can see it producing in two years at well below standard operating costs.
Executive Chairman, Mark Clark told Diggers & Dealers Forum that the Karlawinda mine in the Pilbara is seen as a template for reviving gold mining at Mt Gibson, where shallow mining in the 1980s produced 869,000 ounces before mothballing due to a low gold price.
Capricorn won the Dealers Award at Diggers & Dealers last year for its acquisition of Mt Gibson in mid-2021 after unravelling a four-year ownership malaise on the leases.
Clark said a lot of work has gone into Mt Gibson, where 160,000 metres of drilling so far has shown a 2.75 M oz resource and a maiden reserve of 1.45 M oz and, by April this year, seen a prefeasibility study begin.
As with Karlawinda, Capricorn sees a clear mining life at Mt Gibson for 10 years with strong scope to expand targets as heritage clearance continues. Deeper drilling has revealed high-grade zones at Mt Gibson where hits at the Orion zone and elsewhere have included 5m at 30 grams/tonne and 4m @ 35 g/t.
Capricorn has forecast annualised output from Mt Gibson for the first decade at around 152,000 oz. The capital cost for a new gold plant is $265M and this would be largely financed from existing cash flow, though it has a financial arrangement with Macquarie Bank.
The company has not had to go back into the market with a begging bowl as it has been cashing positive since the Karlawinda start-up.
Project construction for Mt Gibson should be underway by mid-2024, with first gold poured 12 months later. The plant could be of a similar size to the one at Karlawinda.
Clark said development of this second mine should take total company output above 270,000 oz pa and should see Capricorn ranked well in operating cost terms and also as an ASX-listed Australian producer.
Karlawinda has 2.25 M oz in resources and 1.25 M oz reserves and is achieving a stripping ratio of less than 4-to-1 in waste to ore. It poured its first ingot in mid-2021 from a plant built in the preceding 18 months that came in on budget.
Clark said this achievement came from having a team that was like a family, as many had also operated with him and mineralogist Nick Giorgetta – an earlier president of Diggers & Dealer – at Regis Resources and Equigold.
As with Mt Gibson, Capricorn has had some exploration hold-ups through the heritage process at Karlawinda and it now has fresh drilling targets.
Guidance for FY24 is for Karlawinda to produce between 115,000-125,000 oz at an all-in sustaining cost (AISC) of between $A1,270-1,370/oz.
In the two years to June 30, 2023 Karlawinda has produced 238,000 oz at an AISC of $A1,169/oz, providing $306 M operating cashflow and a $257 M cash build before exploration.
Karlawinda’s tenements near Port Hedland are a geologist’s exploration dream, with a holding of 2,445 square km on the margin of the prospective Sylvania Inlier and Pilbara Cratons.