Victoria's long-awaited gold production boom is starting to take shape, with Perseverance Corporation's $75 million Fosterville project near Bendigo clearing the bankable feasibility study (BFS) stage.
Assuming completion of project financing by the end of next month, the planned 110,000 ounce-a-year operation could begin production in the December quarter of 2004. At current spot prices, the mine's annual output would be worth $65 million.
Rising gold prices and anticipation that Fosterville would clear the BFS stage has made Perseverance a strong performer on the sharemarket in recent weeks. At yesterday's closing price of 26.5�, the stock is up by 40 per cent on its level of four weeks ago.
The predicted internal rate of return for the project of more than 25 per cent is based on the mining and treatment of 800,000 tonnes of sulphide ore annually. An initial mine life of 7.5 years and an average cash cost of $A321 an ounce of gold was predicted.
While Fosterville was a small producer of gold from oxide ores in the 1990s, its future is tied to the development of the 2 million ounces of gold grading 3.9 grams of gold outlined so far in deeper sulphide mineralisation.
The initial mining operation is based on a mineable reserve of 910,000 ounces of gold grading 4.69 g/t. The company said that the conversion of inferred resources could be expected to extend mine life towards 10 years.
Perseverance said it was well advanced in its discussions with potential financiers. No decision had been made yet on what equity contribution would be needed.
"The financial package will be structured to provide working capital to enable the concurrent assessment of the larger resource potential at Fosterville and to ensure that free cash flow from operations is adequate to maintain this work," the company said.
