Scoping study encourages Medallion Metals to push on with developing Ravensthorpe gold project

The results of a scoping study of the Ravensthorpe gold project has encouraged Medallion Metals to push forward with the processing option of IGO’s Cosmic Boy plant at the mothballed Forrestania nickel operation.

Medallion this week said the study confirmed Ravensthorpe as a technically and commercially robust development opportunity, generating strong cashflows and offering returns on investment which were attractive relative to the identified risks.

The company said total initial metal production could be 336,000 ounces of gold and 13,000 tonnes of copper across a 5.5-year mine life, generating pre-tax cashflows of $498 million at a gold price of $3615/oz and copper price of $5.54/lb.

This would rise to $637m assuming a $4000/oz gold price and $6.15/lb copper price.

The study forecast an average all-in-sustaining cost of $1845/oz for gold.

The total pre-production capital cost was estimated at $73m, including mine establishment and process plant modifications.

The base case net present value was $329m, with an internal rate of return of 129 per cent, and payback period of one year.

This rose to a net present value of $429m, IRR of 69 per cent, and payback period of nine months based on the spot gold price.

Medallion entered into an exclusivity agreement with IGO in August to negotiate the acquisition of the Forrestania nickel operation assets, located to the north, including the Cosmic Boy processing plant and associated infrastructure.

Medallion this week said these negotiations continued to advance in a positive fashion.

The company said subject to the satisfactory completion of these negotiations, Medallion would look to complete a bankable feasibility study and make a final investment decision by the third quarter of next year.

Medallion managing director Paul Bennett said the scoping study had demonstrated a unique and compelling opportunity to bring the Ravensthorpe mineral resource together with the established infrastructure at Forrestania to achieve a low-capital, low-risk and rapid pathway to gold and copper production in a strong price environment.

“In addition, re-establishing gold production capability at Forrestania, a historically significant gold province, provides an exciting platform for future growth,” he said.

“In parallel with continuing exclusive negotiations with IGO to acquire Cosmic Boy, we’re advancing environmental approvals for an underground development at Ravensthorpe and are well advanced with a 15km drill program to grow the size and confidence of the underground resource and to support further metallurgical test work.

“We continue to progress apace toward development at Ravensthorpe and we think we’re well placed to make near-term gold-copper production and generation of strong cashflows a reality.”

IGO announced in July it was putting its Forrestania nickel mine south of Southern Cross into care and maintenance, with the battery metal’s fortunes remaining in the doldrums following the collapse in the nickel price because of cheap Indonesian product flooding the global market.

IGO picked up Forrestania in 2022 as part of its ill-fated $1.3 billion takeover of Western Areas.

Its full value was later written off entirely.