Alliance Resources Limited (ASX: AGS) today reported that independent consultant Mining One Pty Ltd has completed a Scoping Study confirming a positive and robust gold project at Weednanna which includes the construction of a new 250,000 tpa gold processing plant and tailings storage facility.
Weednanna Gold Deposit is Alliance’s 100% owned project located in South Australia. The scoping study defines the completion of a preliminary technical and economic study of the potential viability of a combined open pit and underground mine and gold processing plant constructed onsite at the Weednanna project.
Managing Director Steve Johnston stated that the positive outcome of the scoping study provides strong encouragement for Alliance to commit to the next stage of its exploration and development program.
The scoping study was completed at +/- 35% accuracy into the potential viability of the Mineral Resources at the project to support a new 250,000 tonnes per annum (tpa) gold processing facility on site. It has been stated that the gold mineralisation at Weednanna remains open along strike and at depth and there is significant potential to increase the existing mineral resources.
On the cost front, the processing plant and tailing storage facility (TCF) is estimated to cost approximately $36 million. The Open Pit Pre-Strip is expected to cost $7.6 million, taking the Total Capital (pre-production) cost to $43.5 million.
The first mineral resource estimate stands at 1.097 million tonnes @ 5.1 g/t gold for 181,000 oz gold, confirming Weednanna Gold deposit as a quality project with outstanding economic potential. These mineral resources underpinning the Scoping Study are based on 49% Indicated resources and 51% Inferred resources.
It has further been informed that 83% of Mineral Resource occurs within 120 metres of surface and is readily accessible using an open pit or underground mining techniques. The company also believes that there exists the potential for new gold shoots like major mineralised quartz vein, not included in current Mineral Resource.
Alliance stated that to achieve the range of outcomes indicated in the Scoping Study, it requires the funding within the range of $40-$48 million. The company seeks to raise fund through both debt and equity financing. As per the report, it may go for other ‘value realisation’ strategies that include a sale, partial sale or joint venture of the project.
Given the positive outcomes of the Weednanna Scoping Study, the company has now commenced further drilling to infill the Inferred mineral resources in order to increase the classification to Indicated mineral resources, and Define the limits of and extend the existing gold shoots, and explore for new gold shoots within the deposit.
The aim of this work is reportedly to develop knowledge of the deposit to a level which will support a higher level study, pre-feasibility or feasibility study, and to increase the mineral resources and to commence the project approvals process. The company stated that the above work program is expected to take 12 months to complete.
AGS stock price has edged up by 1.099% to trade at $0.092 on 18 April 2019. Over the past 12 months, the stock has declined by 26.20% including a negative price change of 7.75% in the past one month.