20 March 2015
Patersons Securities - Research Note. Read »
Primary Gold Limited, listed on ASX in 2013 (ASX:PGO), is a gold-focused company transitioning from explorer to producer at its advanced Mt Bundy Gold Project located in the Northern Territory. Mt Bundy, located 100km east of Darwin, currently hosts a Mineral Resource of over 1.4 million ounces gold at the flagship Toms Gully underground mine and mill (315,000oz), the Rustlers Roost mine (968,000oz, Primary 80%) and the Quest 29 deposit (148,000oz).
Primary Gold’s main focus is to return its wholly-owned Toms Gully Mine and processing mill to production.
Toms Gully has historically produced high-grades, including +9g/t head grades in the former open pit, and currently has a Mineral Resource grade of ~9g/t and maiden underground Ore Reserve of 175,000oz at ~7g/t.
Additionally, the Toms Gully project includes significant infrastructure:
A positive bankable Feasibility Study based on annual production of 60,000-65,000oz over an initial 3 year life supports a low capital (~A$25M) start-up with low operating costs (A$640-$650/oz), and total costs of A$985-A$995/oz (C3 after initial capital).
This will enable rapid payback (22 months) and generate approximately A$50 million free cash to grow the Company and re-invest into exploration.
A pending Environmental Impact Assessment will mark the final step in the authorisations, enabling project funding to be finalised for an immediate start to gold mining and production.
Primary is continuing exploration work to increase the mine life of the underground operations at Toms Gully as well as identifying supplementary feed sources close to the Toms Gully mill.
Primary Gold also holds a further 2,020 square kilometres of prospective exploration tenure in the northern Pine Creek areas, which remains underexplored.
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