PERTH (miningweekly.com) – ASX-listed Aurelia Metals on Monday said it was considering a "range of funding options" for its Federation project, in New South Wales, following a positive feasibility study (FS).

The study was based on the development of an underground mining operation at the Federal deposit, with the ore to be trucked to existing infrastructure at Aurelia’s Peak mill to produce gold dore and separate lead, copper and zinc concentrates, while the remaining ore would be directed to the Hera plant to produce gold dore and lead/zinc concentrate.

The FS estimated that the project would require a capital investment of A$108-million to support the four-million-tonne-a-year operation, producing 313 000 t of zinc, 182 000 t of lead, 98 000 oz of gold and 535 000 oz of silver in concentrate, over a mine life of eight years.

Average yearly production is targeted at 44 000 t/y of zinc, 25 000 t/y of lead, 11 000 oz/y of gold and 74 000 oz/y of silver.

The study estimated a pre-tax net present value of A$186-million and an internal rate of return of 37%, with a pay-back period of just over three years, and average annual earnings before interest, taxes, depreciation and amortisation of A$78-million.

“Federation is one of the great discoveries of recent decades in the Cobar basin. a very high-grade polymetallic deposit that, while defined to its current boundaries for the purposes of recent mineral resource estimate and feasibility study cut-offs, remains open in multiple directions with further potential to extend,” said Aurelia MD and CEO Dan Clifford.

“Given this potential, it is important to note that the Federation FS represents just the starting physical and economic picture of the development of Federation. The decision to treat Federation ore through our existing mills at Peak and Hera was, in the end, an easy one. Given how the construction market and cost environment has moved over the past 12 months, it is, quite simply, the most direct and lowest risk pathway to realising value and delivering shareholder returns from the Federation deposit.”

Clifford noted that opportunity cost to the business was also minimal given that the Hera mine was approaching depletion and rescheduling of Peak mine operations to focus on higher margin material had created capacity for treatment of the higher value Federation ore.

“We retain substantial flexibility within our portfolio. Depending on how Federation grows going forward, we maintain the option to construct a dedicated, standalone processing facility for Federation ore in order to maximise metal recoveries and payabilities.”

In responding to comments that Aurelia could potentially be launching a capital raise to fund the development of the Federation deposit, the company told shareholders that it was looking at a range of funding options to obtain the necessary funding.