Funding and Feasibility Challenges Loom Despite Tunkillia’s Strong Optimised Scoping Study

Optimised Scoping Study Highlights

Barton Gold Holdings Limited (ASX: BGD) has announced the results of its Optimised Scoping Study (OSS) for the Tunkillia Gold Project in South Australia, marking a substantial upgrade over the Initial Scoping Study (ISS) released in July 2024. The OSS extends the project life to approximately 10 years, increases payable gold by around 13%, and delivers material capital and operating cost savings.

The study outlines a streamlined development plan featuring a 5.0–5.5 million tonnes per annum (Mtpa) carbon-in-leach processing plant, with a focus on bulk open pit mining across three major pits: Area 223, Area 223 North, and Area 51. Notably, the Stage 1 ‘Starter Pit’ is expected to produce approximately 206,000 ounces of gold and 491,000 ounces of silver in just 13 months, generating operating free cash flow of up to A$825 million and achieving a payback period of less than 1.1 years.

Financial and Operational Efficiencies

The OSS reveals upfront capital expenditure savings of about A$35 million, reducing the total capex to A$399 million compared to the ISS. This is driven by process optimisations such as a three-stage crushing circuit replacing the previous single-stage crush and semi-autogenous grinding mill, leading to a 34–35% reduction in comminution power costs and 18–24% lower processing operating costs.

Operating costs net of silver by-product credits average between A$2,172 and A$2,222 per ounce of gold, slightly higher than the ISS due to inclusion of lower-grade materials and expanded pit design. However, the project’s financial metrics remain robust, with a net present value (NPV) ranging from A$781 million to A$1.4 billion and an internal rate of return (IRR) between 48.3% and 73.2%, depending on gold price scenarios.

Technical Innovations and Environmental Benefits

The OSS incorporates several technical advancements, including a renewable energy microgrid designed to reduce power costs and environmental footprint, and the addition of a post-leach thickener that cuts processing water consumption by approximately 35%. These improvements not only enhance project sustainability but also contribute to operational cost savings.

Mining Associates Pty Ltd and GR Engineering Services Limited led detailed mine planning and capital cost estimation, respectively, with capital cost accuracy estimated at ±35%. The study also benefits from extensive drilling campaigns and metallurgical testwork completed since 2019, underpinning confidence in resource estimates and processing assumptions.

Path Forward and Funding Considerations

With the OSS confirming Tunkillia’s commercial viability, Barton plans to accelerate preliminary feasibility study (PFS) activities, including environmental surveys and resource upgrade drilling. The company anticipates a funding requirement of approximately A$460 million, expected to be met through a combination of debt and equity financing. Barton’s management highlights a strong track record in capital raising and asset monetisation, with current cash reserves of around A$7 million and a low net cash burn rate.

While the OSS provides a compelling financial outlook, Barton cautions that the study remains preliminary, with no Ore Reserves declared yet. The inclusion of Inferred Resources introduces geological uncertainty, and the availability and terms of funding are not guaranteed. Regulatory approvals and further technical studies will be critical next steps.

Strategic Regional Positioning

Tunkillia’s location in the Gawler Craton benefits from existing infrastructure, including access roads, a borefield for water supply, and proximity to the only gold processing plant in the region. Barton also holds the nearby Tarcoola Gold Project, which may offer complementary development opportunities and potential resource expansions.

Overall, the OSS positions Barton Gold’s Tunkillia project as a large-scale, efficient, and financially attractive gold-silver operation, setting the stage for the next phase of development and funding discussions.