Ausgold DFS highlights robust Katanning financial returns

A definitive feasibility study for Ausgold’s Katanning gold project in WA highlights excellent production potential and economic metrics.

Ausgold is celebrating a positive DFS which outlines the development of a large-scale, long-life open pit gold project. Pic: Getty Images.

• AUC DFS shows strong gold production and financial returns for Katanning project

• Annual production of 140,000oz in first four years supports strong early cashflow and rapid capital payback

• Company eyeing final investment decision mid next year as permitting activities progress

Special Report: Ausgold has released a positive definitive feasibility study for its Katanning gold project (KGP) in WA, highlighting robust returns over a 10-year mine life.

The DFS is a key step towards the development of a substantial new open pit gold mine and details an ore reserve of 1.25Moz, delivering average annual production of 140koz over the first four years and 1.14Moz over the life of the mine, based on a 3.6mtpa mining and processing operation.

Ausgold (ASX:AUC) holds more than 3500km2 of what’s essentially an entire greenstone belt and has a resource of 2.44Moz at an average grade of 1.11g/t.

This Resource is constrained to an economic $4,500/oz pit shell, which AUC believes is a more rigorous and appropriate approach for a project entering the development phase.

The project’s economics are also looking excellent based on a fairly modest gold price of A$4,300/oz, with a post-tax cashflow of A$1.37Bn, IRR of 53%, an AISC A$2,180/oz over first four years and A$2,265/oz over the life-of-mine.

This supports early cashflows plus a payback of just 13 months from first production.

At the current spot gold price of approximately A$5,000/oz, projected post-tax cashflow would increase to $1.91 billion and IRR to 68%, with the payback period reducing to just 12 months.

The company says the project is positioned in the low half of the cost curve. Source: AUC.

More from Ausgold: Katanning all set for feasibility and financing milestones

Australia’s next mid-tier producer

The company said the study confirmed the project as a development-ready, long-life, open-pit gold project with a fast payback period and excellent financial returns at a range of forecast gold prices.

“We are delighted with the outcomes of the DFS which clearly demonstrate the robust financial returns that will be generated by the KGP,” AUC executive chairman John Dorward said.

“The on schedule completion of this high-quality study marks a critical milestone in Ausgold’s journey to becoming Australia’s next mid-tier gold producer.

“We are now turning our minds to the next phase of project development, including front-end engineering and design and debt financing, while we also progress activities to finalise land access and complete permitting for the project.”

Plus, there’s room to grow the resource, with the company planning an aggressive exploration program across the large tenement holding surrounding the KGP to target mine life extension.

The plan now is to progress to a final investment decision by mid-2026, with permitting and early engineering works to allow the ordering of long-lead time equipment underway.

Initial production is targeted for late 2027.

This article was developed in collaboration with Ausgold, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.