The project will produce 30,000 ounces of gold and nearly 4000 tonnes of copper per annum (plus pyrite), at current margins (after by-product credits and on an all-in sustaining cost basis), of more than $A1000 per ounce.
Carbine had an enterprise value this week of circa $18 million.
Carbine has 75% of the project and wants to move to 100%. The cost of this is yet to be determined, with Carbine and vendor Raging Bull Metals now in a 30-day negotiation period.
Raging Bull is associated with previous Carbine managing director Patrick Walta, and Carbine is currently assuming the consideration for the 25% will be met by the issue of shares.
While the capital cost is up more than 30% on pre-feasibility estimates made in 2015, Carbine managing director Tony James (who was appointed in May), indicated the two numbers were broadly in-line given additional plant and design modifications.
He also suggested a key differentiation between Mount Morgan and typical mine developments in Australia was the already more than nine years of reserves delineated, and the strong case for a similar addition down the track.
Given the expected margins and long life, that means Carbine has strong foundations to grow the company corporately, or reward shareholders with dividends.
Asked about the technical risks, James suggested it was more risky than a conventional gold operation on account of it having three production streams, but nowhere near as risky as, for example, as a nickel laterite operation featuring high pressure and high temperatures.
It is a straight forward “leaching process” and there is “nothing that would alarm”, James said.
James said he intends to be around for the long term, saying the project offered a great corporate and social opportunity – the latter relating to Carbine’s venture being a catalyst for cleaning up the historical environment disaster caused by acid drainage at Mount Morgan.
Shares in Carbine were unchanged at 12.4c in afternoon trade, capitalising the company at a little over $24 million.
A $7 million raising back in August priced new shares at 20c.
