Carnavale Resources has completed a bankable feasibility study for its Kookynie Gold Project, outlining an 18-month open-pit operation with A$104 million in pre-tax free cash flow at a A$6,000/oz gold price. The project now has a maiden 35.6koz Ore Reserve, but still needs funding, approvals and a third-party processing deal before construction can begin.
- Maiden 35.6koz open-pit Ore Reserve at 5.0g/t gold
- A$104m pre-tax free cash flow and A$87m NPV8 at A$6,000/oz
- A$24m peak funding requirement, excluding contingency
- Swiftsure and Tiptoe mining targeted for the second half of 2027
- Processing agreement, approvals and Final Investment Decision remain outstanding
Kookynie BFS converts a resource into a mine plan
Carnavale Resources Ltd (ASX:CAV) has moved its Kookynie Gold Project from feasibility work towards a funding and approvals test. The completed bankable feasibility study supports two shallow open pits, Swiftsure and Tiptoe, producing 35.6koz of gold from 220kt of ore grading 5.0g/t over an 18-month mine life.
At the study’s base case of A$6,000/oz, the project is forecast to generate A$104 million in pre-tax free cash flow, an A$87 million pre-tax NPV8 and a 417% pre-tax IRR. Those figures are based on an ungeared model, before financing costs, and assume 95% payability through a third-party processor. The capitalised development cost is estimated at A$2.4 million, while peak funding and working capital requirements are put at A$24 million, excluding contingency.
The study follows the May resource upgrade, which reported a 120koz Mineral Resource at 4.4g/t and increased confidence in the shallow inventory. The BFS converts part of that resource into a JORC 2012 Ore Reserve: 31.0koz at Swiftsure and 4.6koz at Tiptoe. All scheduled ore is classified as Measured or Indicated; Inferred material was treated as waste in the mine plan.
High grades underpin the short, high-cash-flow operation
Swiftsure is expected to provide the bulk of production, with 166.9kt at 5.8g/t, while Tiptoe contributes 53.2kt at 2.7g/t. Mining begins at Swiftsure, with Tiptoe scheduled to enter the plan from about month seven. The project is designed around contract mining and trucking ore to a regional CIL processing plant under either an Ore Purchase Agreement or Toll Milling Agreement.
Metallurgy is one of the stronger parts of the study. Testwork reported recoveries of 98% for oxide and transitional material and 99% for fresh rock at a P80 grind size of 106 microns. Earlier coverage had highlighted 98% to 99% recoveries, but the commercial question is now whether a processor will accept the proposed terms and provide a suitable gravity circuit for Kookynie’s coarse gold.
The economics remain sensitive to the gold price, despite the company’s stated A$2,900/oz breakeven price. At A$5,000/oz, pre-tax free cash flow falls to A$72 million and NPV8 to A$59 million. A 10% movement in gold price or grade and recovery is modelled to change free cash flow by about A$20 million.
Funding and processing are the decisive hurdles
Carnavale owns 80% of the Kookynie Gold Project through the Kookynie West Joint Venture, with Western Resources holding 20%. On the study assumptions, Carnavale’s share of the initial A$24 million funding requirement would be approximately A$19.2 million, alongside its share of future working capital. The company has not secured that funding, and acknowledges that any equity component could dilute shareholders.
The project also remains dependent on an executed processing agreement. The BFS assumes A$81/t for processing and A$20/t for haulage, based on a 100km haulage distance, but no OPA or TMA has been finalised. Carnavale identifies the absence of a processing agreement as one of only two risks still rated High after controls, alongside downside exposure to gold prices.
Approvals point to a 2027 decision gate
Applications for the Mining Development and Closure Proposal, Native Vegetation Clearing Permit and Works Approval have been submitted. Carnavale expects the relevant approvals during the first half of 2027 and is targeting mining in the second half of 2027, subject to approvals, contractor appointments, financing and a positive Final Investment Decision.
That timetable places several dependencies between today’s attractive study outputs and actual production. Carnavale still needs to appoint mining and haulage contractors, settle the processing pathway and arrange funding before it can commit to development. The proposed underground transition is even further away: the updated scoping-level assessment suggests A$111 million of potential pre-tax free cash flow from 47koz, but no underground Ore Reserve has been declared and the work remains at approximately +/-35% accuracy.
Bottom Line?
The BFS establishes a compelling economic base case, but Kookynie’s value now depends less on geology than on securing processing, approvals and roughly A$24 million of project funding before the first shovel can turn.
Questions in the middle?
- Can Carnavale secure an OPA or TMA on terms that preserve the study’s A$2,721/oz AISC assumption?
- What funding mix will cover the A$24 million peak requirement, and how much dilution could an equity component create?
- Will the planned 2027 underground work convert the 47koz scoping target and the 11koz beneath Swiftsure into a declared reserve?