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NEWS

Ausgold has confirmed “positive financial metrics” for its
Katanning gold project, about 275km south-east of Perth

Ausgold scopes out Katanning

by Michael Washbourne

istory will show the best discoveries of recent times The scoping study on a base case 1.25 mtpa standalone
Hwere made in areas where few were prepared to look – operation confirmed the project had “positive financial
think Gruyere, Tropicana and Nova. Ausgold Ltd managing metrics” for 7.2 years of mining, based on a revised resource
director Matthew Greentree is applying that sentiment to of 22.9mt @ 1.1 g/t gold for 1.2 moz. Those metrics include
his company’s Katanning gold project in the underexplored a pre-tax NPV of $77 million, IRR of 28% and net cash flow
South West Yilgarn. of $136 million.
“I think we work in a fairly conservative industry and a lot Pre-production capital is estimated at $102.5 million with
of weight is put on nearology but I think the most valuable C1 operating costs of $1,276/oz and AISC of $1,615/oz to
discoveries have been in areas that haven’t had the maintain an average annual output of 50,000oz gold.
attention,” Greentree told GMJ. “Given this is an exploration project that’s been around
“Gold Road [Resources Ltd] is a classic story on the eastern for some time, I’ve been asked the question by a number
side of the Yilgarn. I worked in Laverton when I was a young of investors and other parties about whether this is a real
geologist and that was as far as anyone really ever went mining project, so we went about proving that,” Greentree
on exploration. So, Gold Road did a fairly ballsy move and said.
stepped out into those untouched areas and were quite “We took a fairly conservative approach because we’ve
successful. seen a lot of our peers fall over by being overly optimistic,
“Tropicana is another example of an area where everyone hence why we went a bit harsh on the resource. We know
thought there might be something, but no one had found we have a large resource there, but some areas are a bit
anything. Nova is in that same belt, but the Albany-Fraser under-drilled, which was highlighted in the scoping study and
was considered the wrong age and the wrong rocks. Now probably added a little bit to the mining costs that are quoted.
it’s got two significant deposits and probably some more we “We also relied heavily on historic processing from the old
haven’t found yet. mill on site and some of the historical metallurgical test work,
“My instinct is that the South West Yilgarn is very similar… so we need to have another look at that. I don’t think this is
and we’ve got some of the best ground available in terms of exactly what the final project will look like and, in a way, we
exploration potential.” never intended for this to be a proxy for a PFS, but we do
While Katanning is far from a greenfields project – small- know we have the basis for an economic project.”
scale mining of the Jinkas and Dingo deposits occurred in One scenario Ausgold is likely to consider in future studies
the mid-1990s – Greentree believes there is plenty of gold is the underground potential of Katanning, particularly at
still to be found in and around the company’s 4,000sq km Central Zone and Jinkas where previous intercepts of 26m
landholding. @ 6.6 g/t from 117m (including 4m @ 37.19 g/t) and 16m
Drilling to test that theory kicked off late last year after @ 6.21 g/t from 114m (including 4m @ 22.38 g/t) were
Ausgold raised $3.6 million from a placement and share recorded.
purchase plan. Funds will also be directed towards additional Greentree is also eager to test a number of regional targets,
metallurgical test work which a recent scoping study identified including the new Burong prospect, which are eligible for the
as an area which required further attention. WA Government’s EIS co-funded drilling grant.

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