Polymetals Mining (ASX:PLY), while just listed in May 2011, has over 25 years of track record of delivering profitable resource projects, including White Dam gold mine in South Australia.
Now Polymetals is fast tracking the Mt Boppy Gold Mine into production and has moved a step closer today to the recommencement of mining operations with the lodgement of the Development Application and Environmental Impact Statement with the New South Wales Government.
The company is in the process of completing a Feasibility Study, which is scheduled to be finalised in early 2012.
Importantly, necessary plant and infrastructure are already in place at Mt Boppy, meaning Polymetals will require minimal capital for refurbishment and start-up.
The company is aiming to begin gold production within eight months of approvals being granted and the recommencement of mining.
The Mt Boppy Gold Mine has historically produced around 500,000 ounces of gold, with about 67,000 ounces of that produced by Polymetals in the mid-2000s.
The mine has a current Measured Resource of 30,000 tonnes at 5 grams per tonne (g/t) of gold, an Indicated Resource of 240,000 tonnes at 3.8g/t and an Inferred Resource of 365,000 tonnes at 4.6g/t for 87,000 ounces of gold.
Polymetals has completed infill drilling to upgrade the resource, with a new resource assessment underway. The company’s A$6 million fully-funded Canbelego Exploration Program is targeting an extension and upgrade to the resource to extend the life of the mine.
White Dam Success
Polymetals is already producing from the White Dam Gold Mine in South Australia in joint venture with Exco Resources (ASX: EXS).
The mine went from the start of construction to first gold production in just 31 weeks. The company has a 25% interest and is operator of the mine, which has been in production since April 2010.
Total production for the 2011 financial year was 87,400 ounces, which was 30% better than expected. A further 19,400 ounces was produced to the end of October.
To put the cash return into perspective, Polymetals cash costs were $450 per ounce and the average gold price received was $1,280 per ounce. That’s a return of almost three times is cash costs.
Polymetals has around $21.3 million cash in the bank with no debt. Cash reserves increased by $2.5 million during the September quarter as production from the White Dam Gold Project continued to fund the company’s corporate overheads and build cash reserves.
Polymetals also banked a further $2.5 million from the sale of its Boorara Project to MacPhersons Reward Gold (ASX: MRP).
Polymetals witnessed a good start to public life when it hit the ASX boards in early May after a successful IPO which offered 7 million shares at $1 to raise up to $7 million.
The company holds 932 square kilometres of land in two of Australia’s major mineral provinces, including:
- Canbelego (NSW) - 204 square kilometres of tenements with more than 20 exploration targets and the Mt Boppy Gold Mine which has Measured and Indicated Resources; and
- Drew Hill (NYSE:SA) - 728 square kilometres of tenements with more than 20 exploration targets and the White Dam Gold Mine which has potential for project expansion.
Polymetals excels at bringing projects into production fast (Mt Boppy) and extending mine life (White Dam) and increasing reserves as well as operating in the lowest percentile ranking in cash costs (fifth lowest at White Dam).
In 2011, Polymetals logged these returns:
- EBITDA of $15.9m
- Net profit after tax of $8.4m
- Net cash flow of $13.5m