Evolution Mining has announced that the board has approved mine life extensions of two key sites: Ernest Henry, extended to 2040, and Mungari, extended to 2038.
The Ernest Henry Mine Extension Project is set to progress to Feasibility Study phase, following completion of the Pre-Feasibility Study (PFS) completion demonstrated a compelling opportunity to extend the Ernest Henry sub-level cave operation.
The PFS indicates the base case has an incremental Net Present Value (NPV) of $690 million, with an Internal Rate of Return (IRR) of 28 per cent.
Associated execution capital of $450-500 million (study, infrastructure and mine development capital) includes approximately 60 per cent of this capital providing infrastructure to extend below the 750mRL.
The PFS will deliver an increase of approximately 56 million tonnes for 343,000t of copper and 609,000oz of gold payable below 1125mRL. There is also an associated increase in Ore Reserve of 44.7 million tonnes at 0.7 per cent copper and 0.44g/t of gold.
Based on the timings in the PFS, the majority of this capital is not required until FY27 and FY28. The PFS delivers an additional approximately eleven years of mine life, versus doing nothing which would have mining conclude in FY29.
The mine extension PFS evaluated options for the continuation of sub-level cave mining below the 1,125mRL, assessing conventional trucking against a crushing and conveyor (C&C) system, with due consideration for future geological upside.
The updated Ore Reserve doubles previous estimates:
- 126 per cent increase in tonnes to 77.4Mt
- 103 per cent increase in contained copper to 589kt
- 124 per cent increase in contained gold to 1,109koz
- Mineral Resource outside of PFS scope presents further opportunity
Evolution’s Managing Director and Chief Executive Officer, Lawrie Conway, said, “In under 18 months of owning 100 per cent of Ernest Henry, we have doubled copper and gold reserves and extended the mine life out to 2040. By any measure, this is an outstanding achievement.
“The PFS demonstrates excellent financial returns, but the most exciting aspect is that all of the outstanding exploration success we are enjoying is not yet captured and will be included in the feasibility study that we are now commencing. We have never been so excited about the future of Ernest Henry.”
The board also approved capital investment of $250 million for the Mungari plant expansion, from two million tonnes to 4.2 million tonnes per annum following completion of the Feasibility Study.
The Feasibility Study demonstrated a compelling investment case with an IRR ranging from 19 per cent to 28 per cent at a conservative AU$2,400/oz and spot price of AU$2,965/oz respectively, a mine life of approximately 15 years and an 18 per cent reduction in All-In-Sustaining Costs (AISC) to $1,750 per ounce.
The current mine life is to 2033, albeit at a significantly lower production rate and higher AISC compared to the approved expansion case. Average annual gold production post commissioning is anticipated to be approximately 200,000oz for the first five years (FY27 to FY32), a 50 per cent increase from current production rates of approximately 135,000 ounces.
“Mungari has demonstrated its capacity to consistently and reliably deliver approximately 135,000 ounces per annum in recent years. This plant expansion unlocks the very large regional resource base, reduces AISC by 18 per cent to $1,750 per ounce, extends the mine life out to 15 years, and grows production to over 200,000 ounces post commissioning,” Mr Conway said.
“The expansion was always envisaged and formed part of our due diligence when we acquired the Kundana and East Kundana properties in 2021. Having successfully integrated the operations, this is now the next logical phase of making Mungari a cornerstone asset of Evolution.
“We have rigorously tested the capital cost estimate and are confident in our capacity to deliver this project on time and budget. We are also confident that we will be able to discover additional ounces which will add further to the value of the project and are excited about the future at Mungari.”
