The results of Australia- and Germany-listed Larvotto Resources' prefeasibility study (PFS), completed on its 100%-owned Hillgrove gold and antimony project in New South Wales, show promising economic prospects.
Key operational findings of the PFS include a capital expenditure of A$73-million targeting more than 80 000 oz/y of gold-equivalent production, and a maiden ore reserve of 606 000 oz of gold equivalent at 6 g/t. Development is largely derisked owing to extensive existing surface and underground infrastructure and established permitting.
The PFS's robust financials, using commodity prices of $2 000/oz gold and $15 000/t antimony, include more than 600 000 oz of gold equivalent projected production in the current mine plan, a significantly reduced time to first production, a life-of-mine (LoM) gold all-in sustaining cost (AISC) of less than A$900/oz for gold ounces, and a project payback of less than two years, or one year at spot prices.
The net present value (NPV) at an 8% discount rate (post-tax), is A$157-million and the internal rate of return (IRR) is 50%. At spot prices, the NPV increases to A$383-million and the IRR to 114%.
The company said that there was significant potential to increase mine life and grade through near-mine exploration. The definitive feasibility study (DFS) had begun, with the company targeting first ore by early 2026.
Hillgrove hosts Australia's largest antimony deposit and is among the world's top ten antimony deposits. Larvotto believes that the market for critical mineral antimony is rising owing to its use in solar panels, with a 100% price increase in the past 12 months to record highs.
“Only seven months since our acquisition of the significant Hillgrove project, Larvotto has produced a compelling PFS that highlights the financial and near-term gold and antimony development potential of the project. This achievement has only been possible owing to the considerable efforts and diligence of the Larvotto team, which includes numerous external consultants and advisers," MD Ron Heeks said on August 5.
He noted that all financial and technical objectives had been met, with the capital cost of the development being low compared to a greenfield development and much of the required surface and underground infrastructure already in place.
“The project’s economics are extremely robust even at the conservative prices used in our modelling. At current record spot prices for gold and antimony, these economics are exceptional. Larvotto will be bringing Australia's largest antimony project online in a rising antimony market, driven by the increasing use of antimony in solar panel production whilst production from other global producers becomes stressed, which is a trend that is expected to continue,” Heeks said.
This is the first time that gold and antimony will be targeted with equal priority at Hillgrove. Previously, the mine operated for 30 years as an antimony-focused operation and 100 years prior was a successful high-grade gold mine.
The coexistence of gold and antimony within the same ore zone means the project value can be enhanced, with Larvotto’s strategy to optimise project returns by extracting and processing both metals concurrently and without bias.
Additionally, there is considerable discovery upside at Hillgrove through both extensions around the defined ore reserve areas and new targets, including the high-grade zone recently intersected at Bakers Creek and the large untested lode position between Garibaldi and Brackins Spur.
The PFS, based on a mineral resource estimate updated with drilling from 2022, includes a maiden ore reserve and outlines a technically and economically viable high-grade project demonstrating low operating costs, a high-margin production target profile, and forecasts of potential financial and economic returns.
Conservative modelling parameters were used in the study but spot prices for both commodities, currently at record highs, were also displayed to present the upside of the project.
Larvotto believes that the Hillgrove project economic model is significantly more derisked than its peers owing to the majority of the surface infrastructure, including the process plant, power, roads, decline, and substantial underground development already being in place.
The nearby city of Armidale provides a significant support base for accommodation, transport and skills. With an expected development cost of under A$80-million and a rapid payback of less than two years, Hillgrove will carry less initial debt than most new projects, while producing more than 80 000 oz/y of gold equivalent from high-grade ore.
Following the delivery of the positive PFS, the Larvotto board has now approved the immediate start of the DFS. This process, expected to take until the end of the year, is relatively short given the majority of the items required to be evaluated already exist.
The focus of the DFS will largely be on optimising metallurgical testwork to produce the maximum free gold extraction combined with optimal concentrate production and advancing permitting.
The upside of the project is further amplified by the large resource base that has yet to be evaluated for inclusion into the initial ore reserve. Additionally, the depth potential of most of the mineralised zones has yet to be fully tested. The potential of this mineralisation was highlighted in the recent release of the project’s exploration target of between 670 000 oz and 1.08-million ounces of gold equivalent.
Finalisation of the DFS is expected by the end of the year, which will allow for project financing in early 2025 and project development commencing with the aim of first ore production by early 2026.
According to the PFS, gold-equivalent production averages about 80 400 oz over the LoM. Financial forecasts at a conservative gold price of $2 000/oz gold and $15 000/t antimony demonstrate the high-margin potential of the Hillgrove project with an LoM of seven years, net free cashflow of about A$390-million pretax and A$252-million post-tax, earnings before interest, taxation, depreciation and amortisation (Ebitda) over LoM about A$652-million, NPV at an 8% discount rate post-tax of about A$157-million, and an IRR of 80% pretax and 50% post-tax.
Financial forecasts using a spot price of $2 350/oz gold and $23 000/t antimony highlight the sensitivity of the PFS to higher prices and the significant value proposition with an LoM of seven years, net free cashflow of about A$820-million pretax and A$553-million post-tax, Ebitda over LoM of about A$1.08-billion, NPV at an 8% discount rate post-tax of about A$383-million, and an IRR of 173% pretax and 113% post-tax.
LoM AISC is forecast, excluding by-product net smelter return, at A$736-million base and A$754-million spot. Average free cashflow pretax over LoM is about A$64-million base and A$126-million spot. Preproduction capital is A$73.4-million base and A$67.2-million spot, consisting of A$88.5-million preproduction capital expenditure, including contingencies, with preproduction revenue of A$15.1-million base and A$21.3-million spot. Total sustaining capital costs over the LoM, including contingencies, are A$184.2-million.
