Lunnon Metals reports a significant 49% increase in gold ounces at its Lady Herial deposit, now hosting 54,200 ounces, with mining operations underway and strong economic prospects supported by a binding Ore Purchase Agreement.
- 49% increase in Lady Herial gold ounces to 54,200 oz
- Mining commenced with first ore blast and deliveries underway
- Ore Purchase Agreement with SIGM fixed at 91% recovery and 70% cash flow share
- Deposit remains open down plunge with further mining potential
- Feasibility study confirms robust economic extraction at current gold prices
Resource Upgrade and Mining Commencement
Lunnon Metals Limited (ASX: LM8) has announced a substantial 49% increase in the gold ounces contained within its Lady Herial Mineral Resource estimate. The updated resource now stands at 0.79 million tonnes grading 2.1 grams per tonne gold, equating to 54,200 ounces. This milestone comes just two years after the deposit’s discovery in February 2024, underscoring the rapid progress made by the company.
Mining operations have officially commenced at Lady Herial, with the first ore blast completed and ongoing deliveries to the Run of Mine (ROM) pad. The deposit is situated on granted mining leases within the Kambalda Gold & Nickel Project (KGNP) in Western Australia, benefiting from proximity to the Lefroy mill operated by St Ives Gold Mining Co. Pty Ltd (SIGM), a major shareholder in Lunnon Metals.
Ore Purchase Agreement and Economic Outlook
The company has secured a binding Ore Purchase Agreement (OPA) with SIGM, which fixes a metallurgical recovery rate of 91% and entitles Lunnon Metals to 70% of the free cash flow generated from the mine after cost recovery. This commercial arrangement leverages SIGM’s nearby Lefroy gold plant for ore processing, providing a streamlined path to cash flow.
Extensive drilling campaigns, totaling over 22.5 kilometres, underpin the updated Mineral Resource estimate and have allowed for a high-confidence classification with a significant portion in the Measured Resource category. The deposit remains open down plunge, and Lunnon Metals is actively evaluating further open pit cutbacks and potential underground mining to extend the mine life.
Geological and Operational Context
Lady Herial’s gold mineralisation is hosted within structurally controlled quartz-carbonate breccia veins and shear zones in the Defiance Dolerite, a well-known host rock in the prolific Kambalda-St Ives gold camp. The deposit features multiple stacked mineralised structures, including the Upper, Middle, Lower, and Northwest Prospect zones, with drilling confirming continuity and grade consistency.
The project benefits from a mature mining environment with existing infrastructure and granted mining leases extended to 2046. Regulatory approvals, including mining proposals and native vegetation clearing permits, have been secured, and the company has established agreements with the Ngadju Native Title Aboriginal Corporation to ensure responsible land access.
Looking Ahead
Lunnon Metals plans to update its Feasibility Study to incorporate the new resource data and ongoing open pit optimisation results. The company is prioritising the evaluation of a second stage open pit cutback to the northwest and the integration of the nearby Hustler gold deposit into its short-term development plans. The potential for underground mining beyond the open pit phase remains under technical and economic review, contingent on prevailing gold prices and contract terms.
Managing Director Edmund Ainscough highlighted the achievement, noting the unexpected scale of the resource and the advantage of commencing mining amid a strong gold price environment. With cash flow generation underway and a robust resource base, Lunnon Metals is well positioned to advance its portfolio of gold opportunities within the KGNP.
Bottom Line?
With mining underway and a robust resource upgrade, Lunnon Metals is poised to unlock further value at Lady Herial amid a favourable gold market.
Questions in the middle?
- How will ongoing gold price fluctuations impact the economics of potential underground mining at Lady Herial?
- What is the timeline and likelihood for permitting and developing the proposed second stage open pit cutback?
- How might changes to the Ore Purchase Agreement terms affect Lunnon Metals’ future cash flow and operational flexibility?