Bendigo-Ophir PFS Cuts Capex to A$277M, Targets 1.25Moz Gold at 2.54g/t
Santana Minerals has released an updated Pre-Feasibility Study for its Bendigo-Ophir Gold Project, showcasing higher gold grades, reduced capital costs, and robust financial returns that position the project as a compelling new gold mine in New Zealand.
- Increased overall gold grade to 2.54g/t with 1.25 million ounces recoverable
- Reduced pre-production capital expenditure to A$277 million from A$340 million
- Strong financial metrics, A$6.2 billion revenue, A$3.5 billion pre-tax profit, 65% after-tax IRR
- Low operating costs with all-in sustaining cost (AISC) at A$1,842/oz
- Clear pathway to first gold production by March 2027 with permitting submissions imminent
A Refined Vision for Bendigo-Ophir
Santana Minerals has delivered an updated Pre-Feasibility Study (PFS) for the Bendigo-Ophir Gold Project in New Zealand, refining its development blueprint with improved economics and operational efficiencies. The project now targets a total of 1.25 million ounces of gold over an initial 13.8-year mine life, underpinned by a higher overall grade of 2.54 grams per tonne. This marks a significant enhancement compared to previous studies, reflecting both increased underground production and optimized open pit mining.
The capital expenditure required before production has been trimmed to A$277 million, down from an earlier estimate of A$340 million. This reduction in upfront costs, combined with a robust production profile, positions Bendigo-Ophir as a financially attractive venture with a simple payback period of less than 1.7 years at the current gold price of A$4,950 per ounce.
Strong Financial Fundamentals
The updated PFS projects impressive financial outcomes, including A$6.2 billion in gold sales revenue and A$3.5 billion in profit before tax. After tax, the project is expected to generate A$2.5 billion in free cash flow, delivering a compelling 65% internal rate of return. Operating costs remain competitive, with a cash cost of A$1,741 per ounce and an all-in sustaining cost of A$1,842 per ounce, underscoring the project's low-cost profile.
Mining operations will combine open pit and underground methods, with the Rise & Shine (RAS) open pit delivering ore at 2.75g/t and underground mining contributing an increased 295,000 ounces. The processing plant will employ conventional carbon-in-leach technology, achieving high recovery rates of approximately 93%.
Environmental and Permitting Progress
Santana has completed extensive environmental baseline studies and is poised to submit its formal permitting applications imminently. The project benefits from its location on private freehold farmland with existing agreements, facilitating a smoother permitting pathway. Early works and detailed engineering are already underway, with first gold production targeted for March 2027.
Mine closure planning is also well advanced, incorporating rehabilitation provisions designed to restore natural landforms and water treatment systems at the end of the mine's life.
Risks and Next Steps
While the PFS outlines a strong investment case, the project requires approximately A$277 million in financing, which is not guaranteed and may involve dilutive terms. Approximately 7% of the production target is based on inferred resources, which carry a lower geological confidence. Additionally, key mining permits are yet to be granted, representing a critical milestone for the project's advancement.
Santana is exploring alternative value-creating strategies, including potential divestments or partial sales of its interest in the project, which could influence the development timeline and shareholder value.
Bottom Line?
Santana’s updated PFS sharpens Bendigo-Ophir’s appeal but securing financing and permits will be pivotal to turning ounces into cash.
Questions in the middle?
- How will Santana secure the A$277 million financing without diluting current shareholders?
- What is the timeline and likelihood for obtaining the necessary mining permits in New Zealand?
- Could Santana’s exploration convert more inferred resources to indicated, extending mine life or boosting production?
