Lunnon approves FID for Lady Herial gold project
ASX-listed Lunnon Metals has taken a final investment decision (FID) for its Lady Herial gold project after the completion of a feasibility study demonstrating robust economics at prevailing gold prices.
The feasibility study confirmed the technical and economic viability of a short-life, high-grade, low strip ratio openpit operation to be mined and processed over an eight- to ten-month period. The FID approval follows confirmation that the ore purchase agreement with major shareholder St Ives Gold Mining has become unconditional.
Based on the study, operating free cash flow on a pre-tax basis is estimated at A$40.4-million at a gold price of A$6 250/oz, rising to A$42.9-million at A$6 500/oz and A$47.9-million at A$7 000/oz. Spot gold is currently trading at about A$6 900/oz.
With the FID now approved, Lunnon is moving to finalise mining contracts, enabling mining to start in the near term. Hampton Civil and Mining has been selected as the preferred mining contractor, while Goldfields Technical Services, of Kalgoorlie, has been appointed to provide statutory positions and technical services, including blast design, mine geology, surveying and run-of-mine pad management.
Lunnon said final contracts are being prepared and are expected to be executed shortly. Once in place, site activities can begin.
The company noted that, working alongside its contractors and St Ives Gold Mining, it is confident the Lady Herial mine plan can be delivered safely and efficiently and will be highly profitable at current Australian dollar gold prices.
Nonexecutive chair Liam Twigger said the FID marked a major milestone for the company. “Today’s FID approval is a proud moment for everyone at Lunnon Metals. Being nimble and fleet of foot is a key attribute and speaks to the quality, drive and initiative of our management team.
"To go from discovery at Lady Herial to production in under two years is outstanding and provides a great template and platform to build shareholder value.
"I would like to take this opportunity to thank the Lunnon Metals leadership team, our partners at Gold Fields, our contractors, stakeholders and the DMPE for their hard work and support in getting Lady Herial approved and ready to start mining and generating cashflow.”
The feasibility outcomes and FID approval come as gold prices sit at record Australian dollar highs, underpinning the project’s strong cashflow potential.
