Earlier this month, Regis released a maiden reserve of just over 2 million ounces for McPhillamys, in New South Wales, and a prefeasibility study.
Capital costs for the operation are expected to be A$215.4 million, including $38 million for a water pipeline and $142.3 million for a 7.5 million tonne per annum plant.
“People ask us how we can do it so cheaply, but I tell them to go ask other people how they do it so expensively,” Clark told the Denver Gold Forum in Colorado.
“It’s basically the same plant we’ve built many times in the past.”
The proposed mine would produce 192,000 ounces per annum at all-in sustaining costs of $990 an ounce over a nine-year mine life.
The PFS returned a pre-tax, post-capex net present value of $525 million, at a 5% discount rate.
A definitive feasibility study will be completed by December, and Clark is hopeful of bringing down mining costs.
“I’m hoping there’s a bit more room to move as we go forward with the DFS,” he said.
The company will begin the permitting process, following the completion of the DFS, which is expected to take around nine months.
Regis is aiming for first production in late 2019.
“This is a really exciting project for Regis,” Clark said.
Another area for potential improvements at McPhillamys is via the company’s $3.25 million acquisition of the Blayney gold project earlier this year.
“It will become a lot more important to us going forward,” Clark said.
Of particular interest to Regis is the 501,000 ounce Discovery Ridge deposit, just 32km from McPhillamys.
“We’re really confident this is going to optimise as a robust satellite project,” Clark said, adding that it had a higher grade and lower strip ratio.
The company is about to start a reserve drillout with the aim of developing the deposit alongside McPhillamys for better economics in the early years of the mine.
“We’re now getting cracking on this,” Clark said.
“We think in time this will be looked upon as a really smart acquisition.”
Now that the reserve and PFS is out, Clark said it showed that McPhillamys was a “real project” and he was hoping the market would cotton on in the next few months.
“There’s a view in the market that it’s been a bit of a sleeper project for Regis,” he said.
Regis had $152 million in cash and bullion at the end of June, and Clark said Regis should be able to fund the project from cashflow.
“I’m sure we’ll end up taking a standby facility to keep our options open,” he said.
In the meantime, the company’s flagship Duketon operation is continuing to generate strong cash.
Regis is looking at developing its first underground mine at the project, Rosemont, with a maiden reserve due in December.
The company will also start a 27,000m drilling program on six regional targets.
“We don’t have to find world-beaters on our regional tenure to keep this running,” Clark said.
“I think you should continue to believe there’s life in the old dog at Duketon.”
