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Meeka predicts $261m free cash after feasibility study

Updated: Apr 18

Meeka Metals will process ore from a trio of deposits through a standalone CIL plant at its Murchison project. Credit: File

Meeka Metals has tabled a solid set of numbers from a project feasibility study into its Murchison gold play near Meekathara in Western Australia, forecasting the return of a post-tax free cash flow of $261 million from a mine life of more than nine years and with a payback period of just 22 months at a gold price of $2750 per ounce.

At the set gold price – which is more than $100 an ounce less than the precious yellow metal was trading at in Australia today – the project offers a pre-tax net present value (NPV) of $249 million, with an impressive internal rate of return (IRR) of 40 per cent. The company has predicted its all-in sustaining cost (AISC) at the bargain price of $1696 per ounce.

At the $2750 per ounce quote, Meeka has also outlined a life-of-mine EBITDA of $870 million.

Gold prices peaked at $3065 per ounce in May, softening near the $2880 per ounce mark in recent weeks. Several market forecasters predict prices to remain strong for the rest of this year, trending towards the $3000 mark as it is supported by safe-haven demand amid ongoing concern over global economic development – specifically inflation and faltering growth.

At a gold price of $3000, Meeka says its post-tax free cash flow is boosted by $111 million to $372 million with a post-tax NPV of $256 million and an IRR of an impressive 41 per cent. At the elevated gold price, the company expects a payback period of only 16 months with an AISC of just $1696 per ounce.

Meeka is eyeing an annual gold production from open-cut and underground operations of 80,000 ounces in the first eight years, with a peak production of 103,000 ounces in the sixth year. It is set to recover 663,000 ounces over the initial 9.3-year mine life.

Material sourced from the Andy Well, Turnberry and St Anne’s mines will be fed into a standalone 1-million-tonne per annum carbon-in-leach processing facility at Turnberry. At least 9.2 million tonnes will be processed through the plant during the initial mine life period, with an average feed grade of 2.4 grams per tonne and expected metallurgical recoveries of 95 per cent.

Meeka’s feasibility study has outlined a probable ore reserve of 4.1 million tonnes averaging 3.1g/t for a total of 410,000 ounces of contained gold.

The company recently bumped its Murchison gold project resource up to 12.7 million tonnes at 3g/t for 1.215 million ounces of gold after revealing an initial oxide gold resource of 270,000 tonnes at 2.8g/t gold for 25,000 ounces from its St Anne’s deposit, which has been included in the feasibility study.

Interestingly, Meeka says the mineral resources that support the planned mines remain open at depth with strong opportunities to grow. The company is readying to restart drilling to extend the known resource at Turnberry and Andy Well at depth, in addition to testing the underexplored 7km fertile gold shear system that extends from Turnberry to St Anne’s.

Since we acquired the Project in 2021 we have expanded the Mineral Resource by over 50% and with the release of this Study, outlined a straightforward development strategy that delivers meaningful production and financial outcomes for the Company over an initial 9.3 years. Meeka Metals managing director Tim Davidson.

The company says that with the backing of the solid numbers in its PFS, it is now in the throes of sourcing discussions with several advisors specialising in debt financing.

Meeka is also finalising the remaining environmental studies required to permit the project. Dependent upon permitting approval, management says it is investigating toll-milling opportunities of higher-grade starter pits with nearby third parties to accelerate the development timeline.

With a mine-ready mineral reserve outlined in the mining-friendly Murchison precinct, permitting well underway and financing being sought, Meeka looks to have its finger on the trigger to be ready to start development at a time of strengthening gold prices.

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