A preliminary economic assessment (PEA) of the Cuffley lode suggest it contains a "potentially saleable" 214,000 ounces of gold equivalent.
This gives the project a net present value of US$67mln based on a four-year mine life and a US$1,300 an ounce gold price. The capital costs are put at US$28mln.
Chief executive Brad Mills: "We intend to infill nearly all of the inferred resources modelled for extraction in the PEA in order to increase confidence to the indicated level by early 2014.
"We also expect that much of this material will be converted to probable reserves with the first development of Cuffley mining levels (assuming demonstration of local grade continuity and mineability) by the end of 2013, making for a very low risk project."
In the same announcement, Mandalay said it continues to generate mineralised intercepts in its resource extension and conversion drilling program on Cuffley and another deposit called the N-lode.
This is expected to support a further expansion of the Costerfield mine's mineral resource and reserves when they are next updated towards the end of the year.
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