Can Kalamazoo’s Mt Olympus Deliver on Its High-Margin Gold Promise?
Kalamazoo Resources has released a compelling Scoping Study for its Mt Olympus Deposit within the Ashburton Gold Project, outlining a technically robust, high-margin gold operation with strong financial metrics and significant upside potential.
- 524,000oz recoverable gold over 73 months at A$2,183/oz AISC
- Pre-production capital expenditure of A$208 million with ~23 months payback
- Pre-tax NPV8% of A$423 million and IRR of 47% at A$4,500/oz gold price
- 1.5Mtpa flotation plant producing 25g/t gold concentrate at 86% recovery
- Additional underground resources and exploration targets offer long-life growth
Robust Economics at Mt Olympus
Kalamazoo Resources Limited has unveiled the results of a Scoping Study for its 100% owned Mt Olympus Deposit, part of the Ashburton Gold Project in Western Australia’s Pilbara region. The study confirms the project as a technically sound and financially attractive gold development, capable of producing approximately 524,000 ounces of recoverable gold over a 73-month life-of-mine at an all-in sustaining cost (AISC) of around A$2,183 per ounce.
With a relatively modest pre-production capital expenditure of A$208 million, the project promises a rapid payback period of about 23 months. At a conservative base case gold price of A$4,500 per ounce, the project delivers a pre-tax net present value (NPV8%) of A$423 million and an internal rate of return (IRR) of 47%, metrics that improve substantially at higher gold prices, highlighting strong upside potential.
Processing Strategy and Production Profile
The study identifies a 1.5 million tonnes per annum flotation processing plant as the optimal approach, producing a high-grade gold concentrate averaging 25 grams per tonne with an 86% recovery rate. This concentrate is expected to be highly marketable, benefiting from low arsenic content and strong demand from international metal traders.
Mining will focus on an integrated open pit combining Mt Olympus and West Olympus deposits, with a total mined ore of approximately 8.5 million tonnes at 2.2 grams per tonne gold grade. The project’s life-of-mine production averages around 73,000 ounces annually, peaking at 110,000 ounces in year five.
Exploration Upside and Regional Potential
Beyond the open pit, Kalamazoo has identified significant underground resources and exploration targets beneath Mt Olympus, estimated between 350,000 and 500,000 ounces of gold. These are not included in the current study but represent a promising avenue for extending mine life and enhancing project economics.
Additionally, the broader Ashburton Gold Project area, including recently acquired Xanadu tenements, offers substantial regional exploration potential with multiple defined resources such as Peake, Zeus, and Waugh deposits. The company plans aggressive drilling programs to convert inferred resources to indicated and to explore extensions along strike and at depth.
Funding and Development Pathway
Kalamazoo expresses confidence in securing the necessary funding, supported by the project’s strong economic fundamentals and the company’s track record. While no formal financing discussions have commenced, the company envisages a combination of debt and equity, possibly supplemented by joint ventures or asset sales to optimise shareholder value.
The Board has approved advancing to a Preliminary Feasibility Study (PFS), with immediate commencement of infill drilling and further metallurgical test work aimed at improving recovery rates and concentrate grade. The project benefits from existing infrastructure, favorable permitting conditions, and proximity to established transport corridors, positioning it for a potentially expedited development timeline.
Environmental and Social Considerations
The Ashburton Gold Project is located on previously disturbed land with minimal additional clearing anticipated. Environmental approvals are expected to be straightforward given prior mining approvals and the project’s focus on brownfields development. Engagement with the Yinhawangka Traditional Owners and adherence to cultural heritage agreements remain priorities as the project advances.
Bottom Line?
As Kalamazoo moves swiftly into Pre-Feasibility and drilling phases, the Mt Olympus project stands poised to capitalize on a strong gold market, though funding and resource conversion remain key hurdles ahead.
Questions in the middle?
- How quickly can Kalamazoo convert inferred resources to indicated to solidify project confidence?
- What financing structure will Kalamazoo adopt to minimize shareholder dilution while securing development capital?
- How will evolving gold concentrate market dynamics and treatment charges impact project economics?