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(Sharecast News) - Greatland confirmed on Monday that its Havieron discovery in Western Australia can be developed into a long-life, low-cost gold and copper mine, following the completion of a feasibility study that outlines substantial economic returns and a clear funding pathway.
The AIM-traded company said the project would leverage existing infrastructure at the nearby Telfer site and could become one of the country's largest underground gold operations.
It said the study projected steady-state annual production of 266,000 ounces of gold and 9,600 tonnes of copper, generating pre-tax free cash flow of $739m a year, rising to $1.2bn at current spot gold prices.
The mine was expected to operate at an all-in sustaining cost of $1,610 per ounce.
Greatland said the mine plan was underpinned by an updated ore reserve of 38.5 million tonnes at 2.63 grams per tonne of gold and 0.33% copper, containing 3.3 million ounces of gold and 128,000 tonnes of copper.
The firm described Havieron as the largest Australian underground gold reserve outside assets owned by a global major.
On a base case scenario that assumes long-term gold pricing of AUD 4,500 per ounce, the project carries a post-tax net present value of $2.9bn and a 22.5% internal rate of return.
At spot gold prices, the NPV increased to $5.4bn and the IRR to 31.5%.
Pre-production capital expenditure was estimated at $1.07bn, which Greatland expected to meet from its $750m cash position at the end of September, ongoing Telfer cash flows and a $500m lending commitment secured from a syndicate including ANZ, HSBC, ING, NAB and Westpac.
First gold was forecast roughly two and a half years after a final investment decision, which is targeted once environmental approvals are secured during the 2026 financial year.
The study assumed Havieron ore would be processed through the Telfer plant, with $200m of upgrade costs included in the capital budget.
Greatland said there was further upside if the current Telfer mine life could be extended, allowing co-processing that could reduce costs.
Managing director Shaun Day described the results as transformational for the group.
"Today, we are delighted to deliver our feasibility study which confirms Havieron's world-class quality and sets the pathway for its development into a long-life, low cost, leading Australian gold-copper mine that will integrate efficiently with the existing infrastructure at Telfer," he said.
"The assessed steady state average production target of 266koz gold and 9.6kt copper annually would generate significant after tax free cash flow of $550m per annum at our base case pricing, or $870 million per annum at spot gold pricing."
Day added that the company is well positioned to progress the development.
"We approach this development phase with an exceptionally strong balance sheet, substantial ongoing production from Telfer, and new corporate debt finance commitments with a tier one lending syndicate, that together provide us confidence that Havieron's development is expected to be fully funded," he said.
"The potential is to deliver Havieron and in parallel extend the mine life of Telfer to achieve the full potential of the Greatland platform."
At 1233 GMT, shares in Greatland Resources were up 6.1% at 400p.
Reporting by Josh White for Sharecast.com.