Metals and mining sector company, Independence Group NL (ASX: IGO) today announced the commitment to develop Boston Shaker Underground mine at the Tropicana Gold Mine in Western Australia with its Joint Venture partner AngloGold Ashanti Australia (AGAA). The development will bring the first gold production to live by September 2020 quarter.
The Joint Venture partners, IGO (30%) and AGAA (70%), approved the development of the Boston Shaker Underground mine following successful completion of a Feasibility Study as the study demonstrated strong financial and technical viability to the development.
IGO’s Managing Director, Peter Bradford, commented: “Although Tropicana is not aligned with IGO’s strategic focus on metals that are critical to clean energy, it is a high-quality asset delivering strong free cash flow with significant opportunity for further value enhancement that remains a core part of the IGO portfolio.”
The report read that the Boston Shaker underground mine is expected to contribute an average 100,000 ounces per annum of gold production from FY21 resulting in Tropicana gold production being maintained at between 450,000 and 500,000 ounces per annum, on a 100% basis, over the five years through to and including Fiscal 2023.
As per the company’ schedule, the mine construction and development will start in the June 2019 quarter, representing one of the lowest cost gold operations of scale in Australia. Both the Joint venture partners are reportedly testing for an extension to the Boston Shaker Mineral Resource, which remains open a depth.
The current open pit mining contractor at Tropicana, Macmahon Holdings (Macmahon) has been appointed as the underground mining contractor. The company believes that the appointment of Macmahon as a preferred contractor would enable unlocking additional synergies and the delivery of higher value for Tropicana.
Independence Group told that the Feasibility Study assessed an underground operation mining at a rate of approximately 1.1Mtpa of Ore Reserves and Mineral Resources at estimated grades of 3.5 g/t Au to produce approximately 100,000 ounces of gold per annum over a period of seven years based on three years production from Ore Reserves and a further four years from Inferred Mineral Resources.
The FS has estimated a capital cost of A$105 million, inclusive of contingency, in real terms, on a 100% basis. So as per IGO’s 30% share in the venture, its capital cost is estimated at A$32 million. This estimation of capital cost represents higher than the previously reported PFS capital cost estimate as a result of an increase in the development size to accommodate more material movement and reduce ventilation constraints, together with a revision to tender prices during the FS, told IGO.
In today’s trading session, IGO has slipped by 0.311% to stand at $4.805 on 28 March 2019 (12:56 PM AEST). The stock is currently trading at a Price to Earnings multiple of 56.110 x with a market capitalisation of $2.85 billion.
Over the past 12 months, the stock has witnessed a dip of 0.82% despite a positive price change of attractive 25.19% over the past three months.