Bellevue Gold Ltd (ASX:BGL)’s Stage Two Feasibility Study on its Bellevue Gold Project in Western Australia has established the company as a member of the exclusive club of global gold miners with first-class technical and financial characteristics.
It will rank among the world’s leading gold projects based on the key criteria of grade, production, location and free cashflow generation.
Bellevue is on track to be Australia’s next new significant high-grade gold mine, with targeted first production in the June quarter of 2023.
The project is now funded to production with a A$200 million loan secured, an underwritten A$106 million equity raising underway and a A$25 million share purchase plan.
Exclusive club of global gold projects
The stage two study shows Bellevue will be a member of the exclusive club of global gold projects characterised by a tier-1 location, reserve grade of +5 g/t and forecast production of +180,000 ounces per annum.
Only seven other assets in the world meet these criteria.
Bellevue managing director Steve Parsons said the study had established Bellevue as a member of the exclusive club of global gold miners with first-class technical and financial characteristics.
“There is one key point of differentiation between this exclusive group of which Bellevue is now a member and other rankings in the industry.
"Superior financial performance"
“That point is superior financial performance.
“Only seven other assets in the world boast a grade of more than 5 g/t and annual production of +180,000 ounces in a tier-one location.
“This study shows Bellevue has reserves of 1 million ounces at 6.1 g/t. That underpins annual production of 200,000 ounces at an AISC of just A$1,014/ounce, which in turn generates pre-tax cashflow of A$270 million a year.”
Parsons said there was significant scope to continue growing the production rate and mine life. “Only 50% of the 3.0-million-ounce resource sits within the mine plan. And since we completed the current resource estimate in July, we have announced a number of strong drilling results from outside this inventory.
“These results demonstrate the potential for further increases in the annual production rate and mine life.
“With this in mind, we have designed the processing plant so that it can be expanded quickly and in a cost-effective manner.”
Drilling continues targeting further resource/reserve upgrades with two rigs operating underground and a third underground rig scheduled to commence drilling in the December quarter.
Its underground drilling is benefiting from a reduced drill cost compared to surface drilling, with increased production and reduced hole depth.
Resources remain open in all directions.
High-grade drill results outside of the Stage 2 Feasibility Study include:
- 7.5 metres at 53.3 g/t gold in DRDD720W1;
- 0.8 metres at 288.1 g/t gold in DRDD654W2; and
- 2.0 metres at 26.6 g/t gold in DRDD476.
Assays are pending for a number of step-out drill holes, including a significant amount of assays targeting an increase in indicated resources.
It has an industry-leading discovery cost of A$18 per ounce.
There is significant potential to continue to expand the project reserves and life of mine with ongoing drilling.
The processing plant has been designed to be readily expandable from the current 1 million tonnes per annum processing rate.
Fully funded to production
Bellevue is now fully funded to production.
It has an underwritten and credit-approved project loan of A$200 million from leading resource specialist bank Macquarie Bank Limited following very strong market interest from 13 leading domestic and international financial institutions
Macquarie has elected to take most of its upfront fee in Bellevue shares.
The speed with which Macquarie provided a credit-approved and underwritten offer reflects the highly bankable nature of the project.
Key terms include a highly competitive interest rate, minimal mandatory hedging requirement and early repayment flexibility.
In addition to the A$200 million project loan facility, Bellevue is undertaking an underwritten placement to raise A$106 million at 85 cents per share with a Share Purchase Plan to raise up to an additional A$25 million at the same price.
Parsons believes Bellevue’s technical and economic strengths had led to the project loan being secured on very attractive terms.
“We are pleased to accept Macquarie Bank’s very competitive and comprehensive support by way of its A$200 million fully underwritten long-term debt facilities to assist Bellevue transition from explorer to producer.
“The significant size and timing of Macquarie’s commitment and its election to take fees in equity is indicative of Macquarie’s long-term confidence in the Bellevue Gold Project.”
Green and gold miner
Bellevue Gold is set to become Australia’s green and gold miner with sector-leading ‘E’ in environmental, social and governance (ESG).
The Stage Two Feasibility Study forecasts Bellevue to become the lowest emitter on a per ounce basis in Australia with a forecast greenhouse gas intensity of 0.202t CO2e/oz, which has improved by about 30% since Feasibility Study 1 with the planned integration of renewable energy.
This new study also positions Bellevue to have the least total of Scope 1 emissions of major Australian gold mines.
Bellevue is forecast to have one of the cleanest power supplies for any gold mine in Australia, producing 3.6 ounces for the same emissions to one ounce produced for the average Australian gold mine
The highly successful exploration program has resulted in the indicated resource growing from 1 million ounces in the Stage One Feasibility Study to 1.4 million ounces in the Stage Two Study with ore reserves increasing from 690,000 ounces to 1.04 million ounces.
This expanded inventory has enabled Bellevue to increase the planned throughput rate from 750,000 tonnes a year to 1.0 million tonnes.
Forecast production in the first five years now will rise from an annual average of 160,000 ounces to 200,000 ounces for a minimal increase in capital cost.
The AISC across the life of the project falls from A$1,079 per ounce to just A$1,014 per ounce, and only A$922 per ounce for the first five years.
Annual pre-tax free cash flow averages A$270 million in the first five years.
The life of mine (LOM) average is 183,000 ounces per annum from the Stage 1’s 160,000 ounces per annum in years 1-5 and LOM average of 151,000 ounces per annum.
The Bellevue mine design and project have been optimised on profitability and free cash flow.
It has an 8.1-year mine life and a LOM EBITDA of A$2.4 billion against stage 1’s A$1.6 billion and a sector-leading EBITDA margin of 66%, based on a A$2,400/ounce gold price; and a rapid payback period post-tax of 1.4 years compared to 1.7 years in stage 1.
The pre-production capital requirement is A$252 million, down from Stage 1’s A$255 million.
It has a net present value (NPV) of 5% (pre-tax) of A$1,311 million and A$943 million (post-tax) compared to stage 1 figures of A$876 million pre-tax and A$562 million post-tax.
The pre-tax Internal rate of return (IRR) of 72% and the post-tax is 62% compared to stage 1’s 58% pre-tax and 35% post-tax.
The Stage Two study will add a total economic contribution of A$2.3 billion into the economy.