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Highlights
- Tunkillia project payback period reduced to 13 months
- $35 million in capital cost savings identified
- Production outlook boosted with extended project life
Barton Gold (ASX:BGD) (OTCQB:BGDFF) has confirmed major efficiency improvements for its Tunkillia gold project in South Australia, following the completion of an optimised scoping study. This revised study outlines a significantly enhanced financial profile for the project, projecting a payback period of just 13 months from commencement.
The Tunkillia project’s lifespan, including construction, has now been extended to approximately 10 years. It will process 30.7 million tonnes of material over eight years of operations, aiming to recover 942,000 ounces of gold and 2 million ounces of silver. This marks a substantial step forward from the initial July 2024 scoping study, which estimated a 22-month payback and a shorter operational window.
One of the standout results from the optimised study is a $35 million reduction in capital expenditure, bringing total upfront costs down from $434 million to $399 million. Additionally, the company has achieved up to 35% reductions in power costs for comminution, a key process in ore preparation. These changes support an average annual production rate of 120,000 ounces of gold and 250,000 ounces of silver.
The updated model, based on an open pit optimised at a gold price of $3,500/oz, anticipates potential revenues between $3.9 billion and $4.8 billion. This is based on forecast commodity prices ranging from $4,000 to $5,000/oz. The all-in sustaining cost of up to $2,222/oz gold and expected operating cash flow of up to $2,829/oz underscore the project’s strong economics. Total pre-tax operating cash flow could reach as high as $2.7 billion, with a pre-tax net present value between $781 million and $1.4 billion, supporting an internal rate of return (IRR) of 73.2%.
A higher-grade Stage 1 “starter pit” is expected to deliver early cash flow, producing 206,000 ounces of gold and 491,000 ounces of silver at a cost of $997/oz gold (after silver credits), translating into $825 million in free cash flow at current prices.
The Tunkillia asset, acquired by Barton Gold (BGD) in late 2019, has since undergone extensive drilling and five resource upgrades. The most recent estimate confirms 1.6 million ounces of gold in 62.9 million tonnes grading 0.8g/t. This, combined with third-party studies, laid the groundwork for the current optimisation.
With the gold sector showing resilience in the broader ASX200 index and investors increasingly exploring ASX dividend stocks, Barton Gold’s updated outlook for Tunkillia offers notable upside potential for market participants closely watching the Australian gold landscape.
