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Millennium Minerals: Commissioning Underway At Nullagine Gold Project, Revenues Beckon

Millennium Minerals (ASX: MOY) continues to advance rapidly towards production at the Nullagine Gold Project, with the stock one of the best performers on the ASX recently.

Importantly - the construction of the gold process plant and associated infrastructure has reached an advanced stage, allowing the commissioning processes to get underway. The commissioning is expected to be completed in September.

Millennium said that full commissioning and ore feed to the plant remains in line with guidance and on schedule for September 2012. The capital construction cost remains within the estimate of $87.6 million as of mid-August 2012.

The Nullagine Gold Project currently hosts a resource of 1.33 million gold ounces contained within 7 deposits on granted mining leases, with the largest being Golden Eagle - which contains around 62% of the total metal inventory.

Commercial gold production is due in the December 2012 quarter.

Development accelerating

In an update to the market Millennium added that development progress at site had accelerated rapidly since July, to the point where pre-commissioning has been completed on the primary crusher facility and load out conveyor.

The structural, mechanical and plate work contract reached practical completion in late July, and over the next few weeks the commissioning team will take control of the remaining sections of the plant.

The mining fleets are fully mobilised and operational, with the mining team fully manned up and has started delivering ore to the ROM pad from the Golden Eagle pit.

Installation of the primary crusher facility is complete as is the coarse ore stockpile area and crushing of fill rock for the coarse ore stockpile will commence shortly.

Full mobilisation of the site management and operational team is well advanced for the start of operations in September.

A major plus for Millennium is that no particular issues have arisen with recruitment and the company has been able to put a first class team in place to manage and run the operation.

Analysis

Millennium's share price is now moving in line with the run up to production as it moves to the verge of becoming a revenue earner as investors dial in to the strong production and revenue profile.

Average gold output is planned at 72,000 ounces per annum at a site cash cost of $756 per ounce.

Proactive Investors could see Millennium increasing production to 100,000 ounces per annum from all deposits based on studies underway.

With a forecast EBITDA of $773 million and a project IRR of 40%, the project economics still indicate that Millennium is undervalued relative to its peers.

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