Odyssey Gold’s Stage 1 Scoping Study for the Tuckanarra Project outlines a low-capital, high-margin open-pit mining operation producing 79,000 ounces of gold over 29 months with pre-tax cashflows of A$180 million at A$6,000/oz gold price.
- Stage 1 targets 79,000oz gold with A$7m initial capex
- Operating costs average A$3,400/oz over 29 months
- Toll processing agreement secured at Kirkalocka plant
- Robust economics supported by 95.9% metallurgical recovery
- Further drilling and feasibility study underway
Scoping Study Highlights Economic Viability of Cable Pit
Odyssey Gold Limited (ASX:ODY) has delivered a compelling Stage 1 Scoping Study for its Tuckanarra Gold Project in Western Australia’s prolific Murchison district. The study focuses on the Cable Pit, projecting the recovery of approximately 79,000 ounces of gold over a 29-month mine life, with operating costs averaging A$3,400 per ounce and initial capital expenditure pegged at a modest A$7 million. Assuming a gold price of A$6,000 per ounce, the project is forecast to generate pre-tax net cashflows of around A$180 million, underscoring its potential as a low-capital, high-margin development.
The mining operation envisaged is an open-pit, contractor-operated drill, blast, load, and haul model with a life-of-mine strip ratio of 11.9:1. The mined ore will be trucked 195 kilometres along the Great Northern Highway to the nearby Kirkalocka Processing Plant under a binding but conditional toll milling agreement with Gylden Resources Pty Ltd, scheduled to commence in Q1 2027. This arrangement significantly reduces upfront infrastructure costs, allowing Odyssey to leverage existing regional processing capacity.
Robust Metallurgy and Processing Assumptions
Metallurgical testwork conducted on representative oxide and transitional samples from the Cable deposit indicates a rapid gold recovery rate of 95.9% within 24 hours, with gravity recovery contributing 18.8%. Cyanide and lime consumptions are low, supporting cost-efficient processing. The Bond Work Index of 20.9 kWh/tonne suggests relatively higher grind energy requirements, attributed to the presence of ferrocrete/calcrete material near surface. Additional testwork on fresh rock and sulphide mineralisation is ongoing to refine these parameters further.
The study assumes processing costs, including haulage, of A$110 per tonne, reflecting competitive toll milling fees at Kirkalocka. Alternative nearby processing options, such as Monument’s Burnakura plant located 30 kilometres from the project, remain under consideration, providing flexibility should conditions at Kirkalocka change.
Resource Base and Mine Planning Support Expansion Potential
The Cable Deposit Mineral Resource Estimate (MRE) stands at 2.75 million tonnes at 1.8 g/t gold for 158,000 ounces, with approximately 55% classified as Indicated. The Stage 1 mining plan targets 87,000 ounces, representing just over half of the Cable resource and a fraction of the total Tuckanarra Project’s 451,000 ounces. Early mining focuses on higher-confidence Indicated resources, with 89% of the first 12 months’ production sourced from this category, mitigating geological risk.
Mine design incorporates geotechnical assessments based on historical pit performance and rock mass characteristics, with overall slope angles varying by weathering domain to optimise pit stability. The mining schedule balances ore extraction with waste stripping and haulage logistics, maintaining a steady feed rate of 600,000 tonnes per annum to the processing plant.
Exploration upside remains significant, with ongoing drilling aimed at upgrading Inferred resources and testing for deeper, higher-grade extensions suitable for potential underground mining. The Company plans to publish updated Mineral Resource Estimates later in 2026, underpinning a growing inventory that could extend mine life beyond the initial 29 months.
Financial Model and Sensitivity Analysis
The financial evaluation, prepared with an accuracy of ±30%, incorporates government and vendor royalties totaling 3.3% of gross revenue. The model forecasts life-of-mine revenues of A$470 million against operating costs of A$270 million and initial capital costs of A$7 million. Peak working capital requirements, including pre-strip and ramp-up phases, are estimated at A$22 million, reflecting the need to build ROM inventory ahead of processing campaigns.
Sensitivity analysis highlights gold price, grade, and metallurgical recovery as the dominant drivers of project value. A ±30% variation in gold price translates to approximately ±A$140 million change in discounted cash flow, while milling and mining costs exert secondary influence. Capital cost fluctuations have a comparatively minor impact on project economics, underscoring the low initial capex and operational leverage.
Funding Strategy and Development Pathway
Odyssey’s Board expresses confidence in securing the estimated A$22 million funding required before positive cash flow generation, considering the project’s robust economics, low capital intensity, and the Company’s market capitalisation of around A$44 million. Potential financing avenues include a mix of debt, equity, streaming, and working capital facilities, although no definitive arrangements have yet been finalised.
The Company is advancing a Stage 1 Feasibility Study alongside ongoing infill drilling, metallurgical variability testing, and environmental baseline studies. Regulatory approvals necessary for expanded mining activities are in progress, with submissions targeting completion by September 2026. The existing Mining Lease and approved Mining Proposal facilitate a rapid startup once financing and approvals are secured.
While the toll milling agreement with Gylden Resources is binding, it remains conditional on Kirkalocka’s restart and Odyssey’s positive decision to mine by the end of September 2026. Contingency plans include negotiations for processing at Monument’s Burnakura plant, offering operational flexibility.
Balancing Opportunities and Risks Ahead
The inclusion of Inferred Mineral Resources, which carry lower geological confidence, introduces some uncertainty, though the Company anticipates upgrading much of this through drilling. Cost estimates and project definitions remain preliminary, subject to refinement in the Feasibility Study phase. Environmental and permitting assessments to date reveal no significant constraints, aligning with the project’s location in a stable Australian mining jurisdiction.
With substantial resource upside, potential for underground mining, and a low capital hurdle, Tuckanarra’s Stage 1 development presents a promising early cash flow generator. Yet, the path to production hinges on securing funding, finalising processing arrangements, and navigating regulatory milestones within tight timelines.
Bottom Line?
Odyssey’s Tuckanarra Stage 1 offers a low-capex, high-margin gold project, but funding and approval milestones ahead will test the company’s execution.
Questions in the middle?
- Will Odyssey secure the A$22 million funding on favourable terms before positive cash flow?
- Can ongoing drilling upgrade Inferred resources sufficiently to de-risk the mine plan?
- How will the conditional toll milling agreement with Kirkalocka evolve if plant restart delays occur?