WA Gold’s scoping study for its Abercromby Gold Project outlines a staged mining plan with modest A$8 million upfront capital, targeting 114,000 ounces from mostly Indicated Resources and projecting A$270 million pre-tax cashflow.
- Stage 1 Mine targets 114,000oz gold with 90% Indicated Resources
- Pre-production capex of A$8 million with 33x potential return
- Staged mining: small open pit transitioning to underground
- Toll treatment agreement in progress with Wiluna Mining
- High gold recoveries (93-95%) confirmed by metallurgical tests
Staged Mining Plan Minimises Capital, Maximises Returns
WA Gold Limited (ASX:WAU) has delivered a scoping study for its 100%-owned Abercromby Gold Project in Western Australia that champions a low-capital, high-return development pathway. The study proposes a staged mining approach starting with a small open pit mining 24,466 ounces of high-confidence Indicated Resources before transitioning underground to recover a further 90,028 ounces, totalling approximately 114,000 ounces in Stage 1.
With a pre-production capital expenditure of just A$8 million, the project forecasts pre-tax free cashflows around A$270 million, translating to a striking potential 33 times return on initial investment. WA Gold’s CEO Ben Pollard emphasised the rigour of including largely Indicated Resources in the study, underscoring the robustness of the economics amid buoyant gold prices.
Robust Economics Backed by Conservative Assumptions
The scoping study assumes a gold price of A$6,000 per ounce, about 10% below the current spot price near A$6,700, yielding a pre-tax net present value (NPV) of A$229 million discounted at 7%. The internal rate of return (IRR) is eye-catching, with the underground operation alone showing a 526% annual pre-tax IRR. Payback is swift at 1.5 years, reflecting the project’s low upfront capital and rapid cash generation.
Operating costs are tightly managed, with all-in sustaining costs (AISC) estimated at A$4,204 per ounce for the open pit and A$2,938 per ounce underground. The study factors in toll treatment at nearby processing facilities, notably a memorandum of understanding with Wiluna Mining to potentially use the Matilda CIL plant just 20km away, significantly reducing capital intensity and accelerating time to production.
Free Milling Ore and Near-Surface Mineralisation Support Fast-Track Development
Metallurgical testwork confirmed the Abercromby ore is free milling with excellent gold recoveries between 93% and 95% using conventional carbon-in-leach processing. The Mineral Resource Estimate (MRE) totals 518,000 ounces at 1.45 g/t gold, with 32% classified as Indicated and 68% as Inferred. Notably, the Stage 1 mine plan focuses on a discrete subset of this resource, with approximately 90% of ounces in the production target classified as Indicated, enhancing confidence in early mining phases.
The resource starts near surface, enabling open-pit mining, and remains open at depth, offering upside potential. WA Gold plans aggressive drilling in 2026 to convert Inferred Resources to Indicated and expand the resource base, which could materially enhance project value over time.
Permitting, Funding, and Next Steps
The Abercromby project sits on a granted mining lease in a well-established gold mining region, facilitating an expedited development timeline. WA Gold anticipates funding the initial A$8 million capex through capital raising, joint ventures, or other arrangements, acknowledging potential dilution risks. The company is actively engaging third parties for co-venturing and tribute-style agreements to share development risk.
Environmental, heritage, and technical studies are underway to support permitting, with no material tailings storage facilities required, reducing environmental hurdles. WA Gold targets a final investment decision by early 2028, aiming to commence mining shortly thereafter.
While the scoping study carries a ±20% margin of error and relies on inferred resources requiring upgrade, its conservative assumptions and staged approach position Abercromby as a compelling near-term gold development opportunity. The company’s focus on rapid production and low capital intensity contrasts with peers chasing larger but more capital-intensive ounces.
Given the current gold price environment and the project’s scalability, the market will be watching how WA Gold advances its feasibility studies, secures funding, and converts resource categories in the coming months.
Bottom Line?
Abercromby’s low-capex, staged mining plan offers a nimble path to production, but investors should watch closely for resource upgrades and funding execution.
Questions in the middle?
- Will WA Gold successfully convert Inferred Resources to Indicated to underpin Ore Reserves?
- How will funding be structured to balance dilution risk and timely project development?
- Can toll treatment arrangements with Wiluna Mining be finalised to maintain low capital intensity?