Primary Gold (ASX:PGO) has achieved an important milestone in advancing its Toms Gully Underground project in the Northern Territory toward production, with submission of a draft environmental impact statement (EIS).
The development coincides with significant pricing momentum for gold in the local market. Although the Comex gold price fell slightly overnight in the U.S., the price of the precious metal has continued to rise in Australian dollars, reaching a value of about A$1630 an ounce.
This pricing environment implies substantial margins are possible for PGO. Updated financial studies on Tom Gully earlier this year demonstrated a low start-up cost with operating costs of $640-$650 per ounce and total costs of $985-$995 per ounce, less start-up capex.
The Toms Gully mine has a history of high-grade gold production (around 115,000 ounces at 8.2 grams per tonne). PGO is poised to continue this trend, having confirmed high-grade resources and reserves in the project’s underground area of 315,000 ounces of gold at 8.9 g/t and 175,000 ounces of gold at 6.9g/t respectively.
Delivery of the draft EIS is a significant step forward in development of the project in that it paves the way for environmental assessment by the NT government and consideration of a revised mine plan.
PGO is targeting this final authorisation in the first half of 2016. In the intervening time the Company will continue to progress its funding strategy and implementation plan.
Infrastructure includes a 250,000 tonnes per annum gold processing plant, 22 kilovolts power to the mine and mill, a 90-metres-deep pit with twin declines and underground development to the top of the next high-grade zone. Additionally, the project is close to Darwin via sealed highways, and has a 25 year granted mining tenure.
