The Julius Gold Project (‘Julius’) located adjacent to the Barwidgee Road approximately 73 km south-east of Wiluna, Western Australia. Ore mined from the Julius Project will be transported and processed at Echo’s existing 2 Mtpa Bronzewing Plant located 72 km to the south.
Resources & Reserves
The Julius Gold Project is located midway between the multi-million ounce Jundee and Bronzewing gold camps. Julius is a virgin deposit, located underneath a minimum of 8 metres of transported cover, and on the margin of a strongly sheared shallow north-west dipping granite greenstone contact. The deposit is deeply weathered, up to and in excess of 60 metres, and comprises three zones of mineralisation. These zones are an upper pisolitic laterite mineralised zone, sitting on top of a well-developed supergene gold zone, grading down into primary mineralisation characterised by strong shearing, sericite alteration, silicification, minor quartz veining and minor enrichment in sulphides, principally pyrite.
Extensive reverse circulation (RC), aircore and diamond drilling has defined the current extents of the deposit. Drill spacing ranges from 40 m x 40 m on the peripheries of the deposit, to 10 m x 10 m drill spacing in the centre of the deposit.
The resource estimate was completed by Lynn Widenbar of Widenbar and Associates Pty Ltd based on all drilling completed at Julius and incorporating revised ISBD (in-situ bulk density determinations) and updated oxidation and rock surfaces, based on new interpretations utilising the latest detailed drilling programs.
Julius Gold Project Mineral Resource Estimate (by category)
|JORC Category||Cut-off Grade (g/t Au)||Tonnes||Grade (g/t Au)||Ounces (Au)|
|Total Mineral Resource||0.8||5.2Mt||2.0||335,008|
Julius Gold Project Mineral Reserve Estimate (by category)
|JORC Category||Cut-off Grade (g/t Au)||Tonnes||Grade (g/t Au)||Ounces (Au)|
|Total Mineral Reserve||0.8||868kt||2.4||68,100|
For full details please refer to ASX announcements dated 23 November 2016 & 18 January 2017.
Bankable Feasibility Study
The BFS was prepared on the 335,000 ounce (5.2Mt @ 2.0g/t Au)1 Julius Gold Deposit and confirmed the 2Mtpa Bronzewing Processing Hub, acquired by Echo through a merger with Metaliko Resources Limited (‘Metaliko’, ASX: MKO), can be refurbished for A$12.5M and confirms Julius is an economic, low-risk deposit and ideal first-feed as part of a long life Yandal gold mining operation.
A gold price of A$1,600 per ounce was used for pit optimisations and key commercial results of the BFS are presented in the table below.
Table 1: Key Project Economics
|Reserves Mined 1||868,089t @ 2.44g/t|
|Initial Life of Mine (LOM)||<2 years|
|LOM Strip ratio||5:1|
|LOM Gold Production1||63,965oz|
|Mill Refurb Capital Cost3||$12.5M|
|Julius Development Capital Cost3||$2.6M|
|First Fill, Owners Costs & Contingency||$2.4M|
|LOM Revenue||$102 million|
|C1 Cash Cost4||$832/oz|
|All-in Sustaining Costs incl. Full Mill Refurbishmemt5||A$1,186/oz|
|Internal Rate of Return||117%|
|LOM EBITDA||$41 million|
1: The Ore Reserves underpinning the above production target have been prepared by a Competent Person or Persons in accordance with the requirements of the JORC (2012) Code. Refer to JORC tables, qualifications and Competent Persons Statements. Recoveries through the Bronzewing Processing Facility are assumed to be 94%
2: See Appendix for Forward Looking and Cautionary Statements
3: See Appendix for Forward Looking and Cautionary Statements, ±10%, includes $2.5M contingency
4. C1 Cash Cost includes mining and processing operating costs, site administration costs, transport, refining charges
5. AISC = C1 cash cost, depreciation and amortisation (Bronzewing Refurbishment), corporate, royalties, sustaining capital costs.
Importantly, the Julius Stage 1 BFS assumed the full cost the mill refurbishment ($12.5M) which is amortised over the initial life of 1.5 years, however any extensions to the life of the mining operation may greatly reduce this AISC. It should be noted that of the AISC of A$1,186, amortisation of capital costs presently account for A$274 per ounce.
1 As announced to the ASX on 23 November 2016, see Qualifications, Competent Persons Statements and Global Resources Table
BFS Highlights Substantial Upside
The BFS study has highlighted the following areas which provide likely project upside:
- Potential to improve project economics by saving in operating cost and schedule timing.
- An operational mill in the region provides strategic value for Echo providing a processing route for other Echo resources in the district with substantial leverage for Echo in the development of those assets.
- Bronzewing mill capacity is only at 50% for the project life, providing opportunity for toll milling which will have the twofold effect of spreading fixed costs thus lowering Julius production cost and generating revenue from milling fees.
- Review of the Julius resource model vs the mining model giving consideration to cut and uncut grades suggests that with careful grade control and mining practices there is potentially an additional 10,000 ounces of gold which may be realised, above the forecast LOM gold production.
- Various low grade stockpiles exist on project tenements that may provide further economic mill feed.
- Production from Julius alone is sufficient to repay the capital of the refurbishment and restart of an operating mill, creating opportunity for reassessment of the various historic mines on the tenements under current gold price and operating cost regimes. A number of advanced resources lie within a 15 kilometre radius of the Bronzewing plant and these will be closely reviewed with the aim of adding reserves and mine life with minimal expenditure.
- With the mill operating, exploration success for Echo can be readily monetised. The cash generated by the project can be utilised for this exploration over a large prospective ground holding in one of the most prospective greenstone belts of in Australia.
Julius Gold Deposit - Resource & Reserve Expansion
The Stage 1 Julius open pit Ore Reserve as documented within the BFS has been based on the highest grade, lowest risk and most cost effective start-up mining opportunity. The results of the pit optimisation and sensitivity analysis completed as a part of the BFS highlighted the potential to develop a series of staged pit designs building on the knowledge gained during the initial mining stage.
Close review of the drill data and block model has shown that additional infill and resource development drilling targetted specifically along strike and in the high grade areas of the resource down dip suggests successful drilling in these areas will lead to an expansion of the contemplated mining operation as documented in the BFS.
Infill drilling to the North of the planned Julius open pit has high potential of leading to an increase in the subsequent mine life and profitability. This has been highlighted by results of the pit optimisation and limited drilling in key locations of the potential northern extension.
Julius November 2016 Julius Resource Model and BFS Design (looking east)
Plan Display – November 2016 Julius Resource Model
Results of the Julius Stage 1 BFS confirms Julius is an ideal, low-risk start-up mining operation, with very significant potential for improvements to economics through increases in mine life. Significant upside remains through the optimisation of mine scheduling at the Project and the Company has planned a large 2017 exploration and development program on its Yandal tenements to grow existing resources and reserves prior to a final commitment to refurbishment of the Bronzewing Processing Hub. This will be the focus of the Company’s activities for the first half of 2017.