Lady Herial Scoping Study Projects A$44.7M Pre-Tax Cash Flow at A$5,000/oz Gold

Context and Location

Lunnon Metals Limited (ASX – LM8) has released the results of a comprehensive Scoping Study for its Lady Herial gold deposit, located within the prolific Kambalda/St Ives gold camp in Western Australia. The deposit sits on granted mining leases, close to established infrastructure including the Lefroy gold processing plant operated by Gold Fields Ltd, the company’s major shareholder.

The Kambalda/St Ives district is renowned for its long history of gold and nickel production, with over 16 million ounces of gold mined historically. Lady Herial, discovered by Lunnon Metals in early 2024, represents a new high-grade, shallow gold deposit within this established mining landscape.

Study Highlights and Technical Outcomes

The Scoping Study, conducted to a +/-30% level of accuracy, is based on a Mineral Resource Estimate (MRE) comprising 573,000 tonnes at 1.6g/t gold for 29,000 ounces, with 89% classified as Measured and 10% as Indicated Resources. This high confidence resource base underpins the study’s open pit optimisation and mine design.

Open pit optimisations suggest mining between 210,000 and 355,000 tonnes of ore at grades ranging from 1.8 to 2.0 g/t gold, yielding between approximately 13,000 and 20,000 ounces of recovered gold. The preferred mine design targets a 300-320kt open pit at 1.8g/t gold, containing around 18,000 ounces, with a low strip ratio of 6.2 – 1.

Metallurgical test work indicates excellent gold recoveries averaging 90.5%, supporting the economic viability of processing at the nearby Lefroy plant. The study forecasts a pre-tax free cash flow of A$44.7 million at a gold price of A$5,000 per ounce, with all-in costs estimated at approximately A$2,100 per ounce.

Commercial and Regulatory Considerations

A key assumption in the study is the successful negotiation of a commercial agreement with Gold Fields Ltd for processing Lady Herial ore at the Lefroy plant, located just 7.5km from the deposit. While exclusivity negotiations are underway, no binding contract has yet been finalised, which remains a material risk.

Regulatory approvals are well advanced, with mining proposals, environmental permits, and native title agreements in place. The deposit is situated on granted mining leases with minimal new disturbance required, and the Company has secured a Land Access Agreement with the Ngadju Native Title Aboriginal Corporation, ensuring community engagement and royalty arrangements.

Financial and Operational Outlook

The study assumes funding between A$5 million and A$10 million to commence production, with the Company confident in its ability to raise capital given its strong cash position and management’s track record. The short mine life, projected at under six months of mining and processing, limits exposure to gold price volatility and operational risks.

Operational costs have been benchmarked against local contractors and processing rates at Lefroy, with sensitivity analyses showing robust financial outcomes even under adverse cost and price scenarios. The deposit’s geometry and high-grade zones contribute to a resilient economic profile.

Strategic Implications and Next Steps

Lady Herial’s development would mark Lunnon Metals’ first gold production, complementing its existing nickel assets in the region. The Company’s management team brings extensive experience from previous roles at St Ives and Gold Fields, positioning it well to advance permitting and commercial arrangements swiftly.

Further work will focus on finalising processing agreements, securing funding, and potentially extending the resource through exploration along strike and down plunge. The Company signals its intent to rapidly progress towards production within the current or forthcoming financial year, capitalising on the strong Australian dollar gold price environment.