Bellevue Gold set to generate strong profits, robust free cashflows with namesake project expected t

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Bellevue Gold Ltd‘s (ASX:BGL) (OTCMKTS:BELGF) stage one feasibility study has found that its Bellevue Gold Project in Western Australia is expected to be ranked amongst Australia’s top-25 gold mines based upon annual production.


Based on the study, the company is set to generate an annual pre-tax free cash flow of A$190 million over seven years of commercial production with a life-of-mine revenue of A$2.5 billion.


BGL is also forecast to be one of the most profitable gold companies in Australia based on a life-of-mine (LOM) EBITDA margin of 63%, based on a gold price of A$2,300 per ounce.


A stage two study, incorporating the impact of the latest discoveries and additional mineralisation on production, profitability and mine life, is on track for completion in June.


The first gold pour is targeted for the December quarter of 2022.


“Outstanding future, abundant free cashflow”



Bellevue managing director Steve Parsons said the feasibility study showed the project met all the key investment criteria from both a financial and technical perspective.


He said: “This independently-conducted feasibility study demonstrates the exceptional strengths of this project.


“The independent experts have confirmed that Bellevue has an outstanding future underpinned by high-grade mineralisation and the need for nothing more than conventional mining and processing methods.


“This combination is expected to lead to low production costs, strong margins, abundant free cash flow of $190 million a year and standout rates of return.”




One of lowest carbon footprints per ounce



The feasibility study also demonstrates that in addition to being on track to be a sector leader based on all the key financial and technical benchmarks, Bellevue is forecast to have extremely strong ESG credentials on a carbon, water and energy per ounce perspective.


“Bellevue is forecast to have one of the lowest carbon footprints per ounce of production in the Australian gold industry,” Parsons said.


“And at the same time, the project will make a huge contribution to the community, with a total projected economic value-add of approximately A$1.8 billion over the life of mine.


“To be on track to meet all these objectives in such strong fashion shows the exceptional quality of our asset.”


Preliminary expressions of interest


The company’s debt advisor Orimco’s Nick Harch added: “The Bellevue Gold Stage 1 feasibility study has been compiled by experienced technical consultants in the gold industry.


“The debt funding process is underway, and we have received preliminary expressions of interest from a large number of Australian and global banks and debt providers.”


Key operational findings



The key operational findings of the feasibility study are:


  • Average annual production of 160,000 ounces in years 1 to 5 and a LOM average of 151,000 ounces per annum;
  • LOM AISC costs of A$1,079 per ounce;
  • Maiden probable ore reserve of 2.7 million tonnes at 8.0 g/t gold for 690,000 ounces, based on a gold cut-off grade price of A$1,750 per ounce;
  • LOM mineral resources and ore reserves of 5.6 million tonnes at 6.4 g/t for 1.1 million ounces;
  • Nameplate capacity of 750,000 tonnes per annum on-site conventional gravity and CIL processing facility, which has been designed to be readily expandable;
  • Conventional mechanised underground mining methods; and
  • First gold pour targeted for the December quarter of 2022

Key financial forecasts


The key financial forecasts of the feasibility study, at a gold price of A$2,300 per ounce are:


  • LOM project EBITDA of A$1.6 billion;
  • LOM pre-tax undiscounted free cashflow of A$1.1 billion (post-tax $0.8 billion);
  • Annual pre-tax free cashflow averages A$190 million over seven years of commercial production;
  • LOM revenue of A$2.5 billion;
  • Rapid payback period pre-tax of 1.4 years (post-tax 1.7 years);
  • Pre-production capital requirement of A$255 million (excluding A$14 million contingency);
  • Internal rate of return (IRR) of 58% (post-tax 35%); and
  • Debt funding discussions underway with a cash balance of A$127.6 million as of December 31, 2020.

Environmental and social conclusions


The project is 100%-owned and on granted mining leases, within a Tier 1 jurisdiction and with exceptional access to infrastructure.


It has a robust and independently estimated resource based upon 292,000 metres of diamond core drilling.


Project development


There are six drill rigs operating at the project targeting further exploration success and further resource conversion, including the exciting Armand and Marceline discoveries.


Underground development and early site works are progressing rapidly, with more than 1,000 metres of development completed to date.


Front-end engineering and design (FEED) is scheduled to start in June quarter 2021 and early site works are scheduled for September quarter 2021


The stage two feasibility study is expected to include results of drilling undertaken since the September quarter of 2020 that has not been included in the current mineral resource.


Financing


The company had a cash balance of A$127.6 million as of December 31, 2020, and has already commenced the debt funding process with Orimco appointed as debt advisors.


Further resource growth


Additionally, two major new gold targets with significant near-term resource growth potential have been defined with the step-out exploration drilling:


  • 700 metres to the north of Bellevue (Lucknow target); and
  • At depth 300 metres below Deacon (Lucien Target).

Combined with the recently announced EIS drilling to the east of Deacon, the exploration pipeline in the near mine area continues to deliver substantial new targets for follow-up resource drilling.


Further significant drill results from the major target at the Marceline Lode, along with the drilling results reported since November last year, are expected to form part of a resource update, which in turn is planned to be incorporated in the stage two feasibility study scheduled for release in the June quarter this year.


A total of about 40,000 metres of diamond drilling has been completed since the last resource estimate with results pending for a significant amount of drilling.


Parsons said the latest drilling results provided more strong evidence of the project’s growth potential, adding: “These results point to further potential growth in the resource, which in turn is forecast to underpin stage two of the project feasibility study.


“Growth in the indicated resource, whether that be through new discoveries such as Marceline or by converting more of the existing Inferred Resource of 1.37 million ounces, would pave the way for increased mine life and production rates.”


Drill results


The Lucknow discovery reported results of up to 1.1 metres at 25.5 g/t gold.


The Marceline lode at Deacon North has emerged as a significant discovery over 350 metres of strike, with drilling continuing from underground and several outstanding intersections.


The company is expediting drilling at Marceline with the aim of bringing the lode into resource categories.


Combined with the recently announced EIS drilling to the east of Deacon, the exploration pipeline in the near mine area continues to deliver substantial new targets for follow-up resource drilling.


Reverse circulation drilling recently commenced at the regional target at Government Well Prospect, 7 kilometres to the north of Bellevue mine.


These high priority targets all sit adjacent to a major road and within the 20 kilometres of strike to the north of the Bellevue mine.

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