Western Gold Resources Limited has released an updated Scoping Study for its Gold Duke Project, revealing a 47% increase in estimated cash surplus to A$56.1 million at a conservative gold price. The study outlines a 14-month mine life with enhanced production targets and secured processing agreements, positioning the project for near-term development.
- 47% increase in estimated undiscounted cash surplus to A$56.1 million at A$4,500/oz gold price
- Production target raised to 686,000 tonnes at 2.1 g/t gold for 42,800 ounces over 14 months
- Binding toll milling agreement secured with Wiluna Mining Corporation’s processing plant
- Preferred mining contractor SSH Mining selected with deferred payment facility
- Funding requirement estimated at A$8–10 million to advance towards production readiness
Significant Upgrade in Project Economics
Western Gold Resources Limited (ASX – WGR) has unveiled an updated Scoping Study for its 100% owned Gold Duke Gold Project in Western Australia, highlighting a substantial improvement in the project's financial outlook. The revised study estimates an undiscounted cash surplus of A$56.1 million at a conservative gold price of A$4,500 per ounce, marking a 47% increase from the previous estimate of A$38.1 million. This robust figure rises further to A$97.3 million if the gold price reaches A$5,500 per ounce, underscoring the project's sensitivity to prevailing market conditions.
The study supports a relatively short mine life of approximately 14 months, with a production target of 686,000 tonnes at a grade of 2.1 grams per tonne, yielding 42,800 ounces of gold. This represents a 53% increase in ore tonnage and a 26% uplift in contained gold ounces compared to earlier assessments, reflecting the inclusion of additional pits such as Joyners Find North and South.
Operational Milestones and Strategic Partnerships
A key development underpinning the updated study is the execution of a binding toll milling agreement with Wiluna Mining Corporation Limited, whose Wiluna Processing Plant is located just 46 kilometres from the Gold Duke Project. This agreement significantly de-risks the project by providing a nearby, operational processing facility, thereby reducing capital intensity and accelerating the path to production.
Complementing this, Western Gold Resources has selected SSH Mining (ASX – SSH) as its preferred mining contractor. Notably, SSH Mining has offered a deferred payment facility, enabling mining activities to commence in a non-dilutive financial manner, which is particularly advantageous for managing upfront capital requirements.
Funding and Next Steps Toward Production
The company estimates that total funding of approximately A$8 million to A$10 million will be necessary to progress the project through pre-production and into operational status. This includes pre-mining capital and start-up costs estimated between A$2.6 million and A$2.8 million. Western Gold Resources has indicated strong interest from private equity firms and maintains confidence in securing the required capital, though acknowledges that terms may impact existing shareholders.
Immediate priorities include initiating grade control and infill drilling to upgrade resource confidence, refining mine scheduling and optimisation, advancing regulatory approvals, particularly for the newly added Joyners Find pits, and progressing engineering designs for infrastructure and haulage routes. The company also continues to explore brownfields targets within the region to potentially extend the mine life and enhance project scale.
Resource Base and Technical Rigor
The updated Scoping Study is grounded in a JORC-compliant Mineral Resource Estimate prepared by Snowden Optiro, comprising approximately 80% Measured and Indicated Resources and 20% Inferred Resources. While the inclusion of Inferred Resources introduces some geological uncertainty, the study applies conservative assumptions and robust pit designs validated by geotechnical assessments.
Metallurgical test work confirms high gold recoveries of around 93%, supporting the use of conventional carbon-in-leach processing methods. Mining and processing costs align with tendered pricing, and the project benefits from low strip ratios and near-surface oxide mineralisation, which collectively contribute to the project's strong economic fundamentals.
Outlook and Market Positioning
Western Gold Resources Managing Director Cullum Winn emphasised the project's compelling combination of rapid payback, low capital intensity, and robust financial returns. He noted that the project remains economically viable across a broad range of gold prices, with positive cash flows projected above A$3,081 per ounce. The company is now poised to transition from planning to execution, aiming to deliver first gold and generate near-term cash flow for shareholders.
Bottom Line?
With key contracts secured and a strengthened economic profile, Western Gold Resources is set to advance Gold Duke toward production, though funding and resource upgrades remain critical next steps.
Questions in the middle?
- How will Western Gold Resources secure the A$8–10 million funding without significant dilution?
- What is the timeline and likelihood for converting Inferred Resources to higher confidence categories?
- How might fluctuations in gold prices and operational costs impact the project's financial robustness?