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Theta Gold (ASX:TGM) eyes huge upside in gold production after the PFS

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Summary

  • The Prefeasibility Study of the underground mines on the project has demonstrated strong economic performance.
  • The current study included three underground mines, and TGM will include other historical mines in the study later for future production modelling.
  • The PFS has demonstrated a strong IRR of 82% and an EBIDTA of US$241.2 million over the Life of Mine (LOM).

In an upbeat market update, South Africa focused gold explorer Theta Gold Mines Limited (ASX:TGM | OTCQB:TGMGF) has announced the Maiden Underground Prefeasibility  Study (PFS) for three of its underground mines - Beta, Frankfort and CDM mines.

These three mines form part of the Central Northern area and are referred as TGME Underground (UG) Project.

The PFS is based on 16% of the 4.5 Moz of underground gold resource and has included the measured and indicated resources. The tenement area is spread across 62,000 hectares and includes 43 historical mining sites. For the maiden PFS, only three of these are included in the study, and the rest 40 will be included in future studies for production modelling.

Latest Update: Theta Gold Mines eyes huge gold production from its South African mines

Surface Infrastructure TGME Undeground Mine Layout (Image source: Company update, 13 April 2021)

In the initial study, TGM focused on including the easy access mineral resource of 684,000 ounces of Measured and Indicated Resources of the TGME Underground project. The TGM team was successful in achieving 63% conversion factor of resource to mining reserve.

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Also, 3.5 Moz of Inferred Resources is available to be upgraded to the Measured and Indicated category, and probably some part of it could be converted to mining reserve.

Through the PFS, TGM showcased an excellent project economics, though the study covered on 16% of the 4.5m oz of Au in the underground mineral resource.  The company hopes to build its production profile or Mining Reserves further by completing the Rietfontein PFS in Q3 2021, along with progressing other mines through to PFS.

Initially, TGM devised a five-year plan for the development of four of its mines, including the Theta Open-pit Starter Project (MR83), Theta Open-pit Extension (MR341), Reitfontein and Beta Underground mines. The five-year plan helps the Company to draw a strategy for the development of the project, which involves open pits as well as the underground resource of over 2.75Moz.  

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Five-Year Growth Strategy (Image Source: ASX Update: 29 January 2021)

MR83 and MR341 are open-pit mines, which are included in Phase 1 of open pit development. The detailed PFS of underground mines and Phase 1 of open-pit mines will enhance the five-year strategy, and the Company will pile on these for further studies on these findings.

The PFS of underground mines demonstrated that the narrow high-grade reefs system could be mined using modern mechanised mining techniques. Metallurgical technologies, including intense CIL and ultrafine grinding, could be used to extract gold on the project.

Mr Bill Guy, Chairman of Theta Gold Mine, expressed his views on the findings of the PFS:

Key Highlights include:

  • The forecast gold price used to calculate financials is US$1,570/oz.
  • The LOM is pegged around 7.67 years and the project is expected to generate EBIDTA of US$241.2 million over the LOM.
  • The All-in Sustaining Cost (AISC) over the LOM will be US$905/oz.
  • The IRR of the project stands at 82% in the study.
  • Total CAPEX over the LOM is US$79 million.

TGM closed the day’s trade at A$0.255 as of 13 April 2021.


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