Alkane Resources takes another step towards Tomingley Gold Project development
Alkane Resources (ASX: ALK) is continuing to progress the Tomingley Gold Project in New South Wales, with copies of the environmental assessment having now been distributed to the relevant government agencies, exhibition centres and specialist consultants for public exhibition.
The exhibition period will run from 17 November to 19 December 2011.
Alkane said that a successful outcome to the development approval process could see the company start construction in 2012, with this leading to commencement of production before mid-2013.
The construction phase is 12 months and will create 100 jobs, with ongoing operations creating 90 full time jobs, most of which would be sourced in the local region.
A Definitive Feasibility Study for the project delivered production of 50,000 to 60,000 ounces of gold a year for an initial 7.5 years, and based on a gold price of A$1,700 per ounce the project should generate cash flow (EBITDA) of around A$250 million with an internal rate of return (IRR) of 32%.
The New South Wales government has agreed to provide financial assistance for a proportion of water and infrastructure costs for the project.
Tomingley Gold Project - a plus 660,000 gold ounce resource
Tomingley already hosts a plus 660,000 gold ounce resource across three deposits, Caloma, Wyoming One and Wyoming Three, with the project having the potential for a minimum seven year mine life, with a target of over ten years.
The plan is for an open pit for the first seven years, to be followed by an underground operation.
Importantly for the project is the access to infrastructure, which includes water, power from the state grid and roads providing both primary and secondary access.
Another plus is the skilled local workforce, which includes a population base of 150,000 within 120 kilometres which can be tapped, and therefore saving costs as no fly-in-fly-out staff or accommodation will be required.
The capital costs for Tomingley is around A$90 million, which comprise a CIL plant (A$43 million), infrastructure (A$22.6 million) and owners costs of A$23 million.
Alkane is currently awaiting development consent, with Credit Suisse already granting mandate to provide up to a A$45 million debt facility with a gold hedging program to return average A$1,500 per ounce.
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