Lunnon Metals has secured critical mining proposal approval for its Lady Herial gold deposit, moving the project closer to production under a binding ore purchase deal with St Ives Gold Mining.
- Mining Proposal approved by Western Australian DMPE
- Key condition met for Ore Purchase Agreement with St Ives Gold Mining
- Native Vegetation Clearing Permit and mine schedule pending
- Extensive drilling and resource definition completed
- Final Investment Decision imminent, mining contracts being finalized
Regulatory Milestone Achieved
Lunnon Metals Limited (ASX – LM8) has announced a significant regulatory breakthrough with the Western Australian Department of Mines, Petroleum and Exploration (DMPE) approving the Mining Proposal and Mine Closure plan for its Lady Herial open pit gold project. This approval marks a pivotal step in the company’s journey to bring its first gold discovery at the Kambalda Gold & Nickel Project into production.
De-Risking the Asset
Since the initial drill hole in May 2024, Lunnon Metals has aggressively advanced the project, completing 20 kilometres of reverse circulation and diamond drilling. This work has defined a high-grade, shallow gold deposit with close grade control spacing, underpinning an initial Mineral Resource estimate and a positive Scoping Study. The study highlighted the potential for robust free cash flow, reinforcing the project's economic viability.
Strategic Partnership and Commercial Framework
Central to the project’s commercial strategy is a binding Ore Purchase Agreement with major shareholder St Ives Gold Mining Co. Pty Ltd (SIGM). Under this agreement, SIGM will purchase all ore above 0.5 grams per tonne gold for processing at its nearby Lefroy Gold Plant. Lunnon Metals stands to receive 70% of the free cash flow generated, aligning incentives and leveraging existing infrastructure to reduce capital intensity.
Next Steps Toward Production
While the Mining Proposal approval satisfies a key condition precedent to the Ore Purchase Agreement, the company is awaiting the Native Vegetation Clearing Permit and finalisation of the mine schedule. Once these are secured, the Ore Purchase Agreement will become unconditional, allowing Lunnon Metals to proceed with contract execution, land clearing, and open pit mining. The Board is poised to make a Final Investment Decision imminently, signaling the transition from development to production.
Community and Environmental Considerations
Lunnon Metals has also formalised a Land Access Deed with the Ngadju People, the traditional custodians of the land, reflecting a commitment to respectful and responsible development. The company’s methodical approach to permitting and stakeholder engagement underscores its focus on sustainable mining practices.
Managing Director Edmund Ainscough praised the team’s steady progress, noting the achievement of de-risking the asset in parallel with regulatory approvals as a testament to the company’s operational discipline and strategic planning.
Bottom Line?
With regulatory hurdles falling away, Lunnon Metals is on the cusp of unlocking value from Lady Herial, but key permits and final investment decisions remain watchpoints.
Questions in the middle?
- When will the Native Vegetation Clearing Permit be granted to enable mining commencement?
- What are the detailed terms and timelines for the Final Investment Decision and contract execution?
- How will fluctuations in gold prices impact the projected free cash flow under the Ore Purchase Agreement?