Dalgaranga Gold Project, Murchison, Australia

Dalaranga Gold Project Location

The Dalgaranga Gold Project is located approximately 70km north-west of Mt Magnet, within the Murchison gold mining district, Western Australia. The project will involve the development of the brownfield Gilbeys deposit and the greenfield Golden Wings deposit.

The project is 80% owned by Gascoyne Resources, who acquired it, along with some adjacent exploration tenements, from private tenement holders in August 2012. Its joint venture partner, who currently holds the remaining 20% stake, is expected to divest its interest to Gascoyne in return for a 2% net smelter return (NSR) royalty.

The prefeasibility study (PFS) for the project was completed in March 2016, whereas the full feasibility study is scheduled for completion in late-2016. The construction works are expected to start in early-2017, while first production is anticipated in early-2018.

The overall investment to bring the Murchison gold project into production is estimated to be A$75m ($58m approximately). The mine is expected to have a life of six years, including the first year which will involve the construction.

Dalgaranga Gold Project geology and mineralisation

The two deposits are located approximately 3.5km from each other. The brownfield Gilbeys deposit, which was developed from 1996 to 2000, produced approximately 229,000oz of gold.

The project is situated within the Archean Dalgaranga Greenstone. The mineralisation at the Gilbeys deposit occurs as quartz-pyrite-carbonate veins within a sheared porphyry-shale-basalt package. The deposit was mined to a depth of approximately 130m below surface, and continues to host mineralisation below the base.

The Golden Wings deposit extends for more than 400m east-west. The gold mineralisation is hosted within a sequence of high-magnesium basalts, basalt and interflow sediments (black shales), and minor porphyries.

The mineralisation extends to surface with 46% of the resource capable of being extracted using free dig. The mineralisation remains open at depth and along strike.

Reserves and production details

The project is estimated to hold combined proven and probable reserves of 10.1 million tonnes (Mt) grading 1.4g/t, containing 442,000oz of gold.

As of February 2016, the project was estimated to hold combined measured, indicated and inferred resources of 23.7Mt grading 1.4g/t and containing 1.05 million ounces (Moz) of gold.

The resources and reserves are expected to increase with further exploration drilling at the recently discovered Hendricks mineralisation, which is located approximately 2km east of the proposed processing plant site.

The project targets peak production of 125,000oz of gold during the first year, while the annual average production rate during the five years of production is estimated to be 104,000oz.

Mining and processing at the Murchison gold mine

The mining method envisaged for the project is the conventional open-pit mining method, integrating drill, blast, laud and haul operations to be performed by a mining contractor. The Golden Wings deposit will be mined through a single-staged pit, whereas the existing Gilbey's pit will be mined using a four-staged cutback.

The 2.5 million tonnes per annum (Mtpa) processing plant proposed for the project will incorporate a primary crushing circuit, a semi-autogenous grinding (SAG) mill, a gravity concentration and intensive leaching circuit, a classification circuit, a leaching and adsorption circuit, an elution circuit, an electrowinning circuit, and a smelting facility.

Infrastructure for the Western Australian gold project

The process water required during the first two years of production will be sourced from the existing Gilbeys pit void, whereas an existing borefield will supply the water for the remaining three years. The potable water will also be supplied by an existing borefield following treatment using reverse osmosis (RO) technology.

“The resources and reserves are expected to increase with further exploration drilling at the recently discovered Hendricks mineralisation.”

The existing tailings storage facility (TSF) will be lifted by an additional 5m to serve the project for the first two years of production, while the Golden Wings pit, which is to be mined first, will serve as the TSF for the remaining three years.

Access to the project site will be by means of two charter planes, operating from Perth to the existing Mount Magnet airstrip. Further transportation from the airstrip to the project site will be provided by buses.

The electricity required for the project will be generated by third party-operated diesel generators, located adjacent to the processing plant. Overhead power lines will be installed to supply the electricity to the mining camp and ancillary project facilities, including workshops and offices.

An accommodation camp for 160 people will be constructed approximately 4km east of the Gilbeys pit and the processing plant.

Key players involved

The PFS was compiled using inputs from RungePincockMinarco (RPM) for the resource estimates, CSA Global for the mining studies and reserve estimate, and Mintrex for the process engineering, and operating and capital costs estimates.