Dateline eyes rapid US gold restart after bumper study
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Murray Region
Dateline Resources has cleared a major hurdle to becoming a major gold producer by announcing a compelling, credible feasibility study (BFS) for its 100 percent-owned Colosseum gold project in California.
The company’s study confirmed a technically straightforward restart of the historic mine; This is supported by US$1.08 billion (AU$1.49 billion) in undiscounted pre-tax free cash flow and a strong internal rate of return (IRR) of 49.5 per cent based on an underlying gold price of US$4200 per ounce (AU$5805).
The economics of Dateline’s Colosseum project become even more eye-catching when considered at a spot price of US$4700 ($6495) per ounce; This shows that undiscounted pre-tax free cash flow increased to US$1.357 billion ($1.87 billion) and the internal rate of return also increased by a significant 59.5 percent. Notably, in the base case the project inks a generous pre-tax net present value (NPV) of US$785 million (AU$1.08 billion), which rises to US$999 million (AU$1.38 billion) using the spot gold price.
The company says BFS outlines a high-confidence production profile underpinned by initial ore reserves of 20.6 million tonnes at 0.95 grams per tonne (g/t) gold. The tonnage is planned to be transferred to a 2.0 million tonnes per annum capacity leached carbon facility with high metallurgical recovery of 91 percent.
‘Our relationships with project financiers are improving as we work to secure the financing needed to start production as quickly as possible.’
Dateline Resources managing director Stephen Baghdadi
Mining will be front-loaded for the first six years, with an average annual gold production of 75,000 ounces. Total gold production over the 10.4-year mine life was determined to be 573,000 ounces, and production is expected to reach 102,000 ounces in the sixth year. The operation will utilize existing ore stocks to recover the remaining 4.4 ounces of gold over the last 133,000 years.
Dateline says its plan has a low 3:1 strip ratio, highlighting the project’s strong mining efficiency. Additionally, reduced waste movement will become a key factor in supporting a total sustainable cost of US$1825 (A$2522) per ounce, with the calculation based on current industry costs to within a 15 per cent margin of accuracy.
The project also provides incredible leverage to the gold price. For every US$100 ($138) per ounce increase in the gold price, undiscounted pre-tax free cash flow increases by US$55 million ($76 million).
The company estimates the capital required to trigger production at US$249 million (A$344 million). This includes capitalized mining of $16 million ($22 million) and contingency of $25 million ($34 million). The initial cost is supported by the strategic procurement of “like new” semi-autogenous grinding and ball mills that have already been secured and are awaiting transport to site.
Dateline general manager Stephen Baghdadi said:: “With BFS completed and Front End Engineering Studies (FEED) underway, our relationships with project financiers are progressing as we look to secure the financing needed to begin production as quickly as possible.”
As an added bonus, beyond the initial reserve, a further 55,000 ounces of inferred mineral resources are located within the designed pit shell, offering immediate potential to extend mine life. Additionally, a promising underground target in the northeast of the northern quarry remains open at depth and is currently undergoing drilling tests.
In addition to the gold core, Dateline is exploring rare earth potential at the Colosseum and operating the Argos strontium project in California. The company also recently consolidated its Music Valley heavy rare earth project, adding further critical mineral depth to its portfolio.
Now that its BFS has been completed, the company is turning to front-end engineering and design while it engages in advanced discussions with global financiers to secure development financing ahead of the final investment decision to bring the Colosseum back into production.
BFS is a big-money result for Dateline, proving that this historic California entity has plenty of gas left in its tank. With a simple relaunch plan and a big upside to the gold price, the company looks like a serious new player in the American gold space.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
