The board of Rox Resources has given approval to progress the Youanmi project, in the Murchison region of Western Australia, to a definitive feasibility study, following a positive prefeasibility study (PFS).

The PFS outlined a long-life, high-grade 100 00 oz/y gold operation at Youanmi, with compelling financing metrics.

Using a gold price of A$3 100/oz, the PFS delivered an aftertax net present value of A$322-million and a 33% internal return on investment.

An estimated A$245-million in preproduction capital is needed to build a mine.

“The project produces 786 000 oz of gold doré over a 7.7-year period, averaging over 100 000 oz/y and with a low AISC cost of just A$1 676/oz, which, at current spot prices, will deliver an operating margin of nearly A$2 000/oz.

“The high-grade, high-margin nature of the project results in very compelling financial metrics and a short payback of less than three years at a base case gold price of A$3 100/oz. The project financials really move up another gear when run at the current spot price of A$3 500/oz, with a life-of-mine free cash-flow of $1.2-billion, meaning on average that the project will deliver more than $150-million in free cash-flow per annum,” said Rox MD Robert Ryan.

Following on from the substantial upgrade in the quality of the Youanmi mineral resource, in particular the underground indicated resource announced earlier this year, a high-grade maiden reserve has been declared as part of the PFS of 546 000 oz at 4.4 g/t gold.

“This is a great result which provides an exceptionally solid foundation for the company’s value proposition and represents one of the highest grade ore reserves for a new gold development project in Western Australia at the moment,” added Ryan.

He noted that there was also upside in the project with the underground resource remaining open down-dip and along strike and near-mine exploration targets of between 1.1-million ounces and 1.8-million ounces, which have the potential to increase the yearly production rate and mine life of the project if successfully converted into resources and ultimately reserves.