Evolution Mining has significantly expanded the size of the resource at the Ernest Henry gold and copper mine in North Queensland after more work on exploration in and around the mine it bought from Glencore for $1 billion in early 2022.
Evolution said the Board had approved the Ernest Henry Mine Extension Project to move to the Feasibility Study phase following completion of the Pre- Feasibility Study (PFS) which demonstrated “a compelling opportunity to extend the Ernest Henry sub-level cave operation.”
If the feasibility study gives the greenlight, the expansion could cost Evolution upwards of half a billion dollars.
In a new ore reserve issued on Monday, Evolution (EVN) said Ernest Henry ore reserve estimate is now 77.4 million tonnes at 0.76% copper and 0.45g/t gold. That’s up sharply from the 34.3 million tonnes reported at the end of 2022 with 0.85% copper and 0.45 grams to the tonne gold.
The high tonnage contains an estimated 589,000 tonnes of contained copper – 103% more than the 299,000 tonnes in the December, 2022 estimate with 1.109 million ounces of contained gold, up 124% from the 614,000 ounces six months ago.
Back in June 2005, Ernest Henry had proved reserves (all then Open pit mineable) of 48 million tonnes @ 1.0% copper and 0.50 grams to the tonne gold so under Xstrata, then Glencore and now Evolution, the mine’s held up well so far as new reserves and their mining are concerned.
That the improvement has come from a small reduction in the cut off grade for copper and no change in the gold cut off suggests the expansion in reserves is based on high quality reserves being outlined in the latest drilling campaigns.
EVN said that its mine extension pre-feasibility study had supported a 17-year mine life extension to 2040. Mining started in 1997.
CEO Lawrie Conway said in Monday’s release that, “In under 18 months of owning 100% of Ernest Henry, we have doubled copper and gold reserves and extended the mine life out to 2040.
“The Pre-Feasibility Study demonstrates excellent financial returns, but the most exciting aspect is that all of the outstanding exploration success we are enjoying is not yet captured and will be included in Feasibility Study that we are now commencing.”
EVN said in Monday’s statement the pre-feasibility study “The PFS indicates the base case has an incremental net present value (NPV) of $690 million, with an internal rate of return (IRR) of 28%.”
“Associated execution capital of $450-500M (study, infrastructure and mine development capital) includes approximately 60% of this capital providing infrastructure to extend below the 750-metre level.
“Based on the timings in the PFS, the majority of this capital is not required until FY27 and FY28. The PFS delivers an additional ~11 years of mine life, versus a ‘do nothing’ case that would have mining conclude in FY29 at 1125 metre level.
“The PFS will deliver an increase of approximately 56 million tonnes for 343,000 tonnes of copper and 609,000 ounces of gold payable below 1125 metre level. There is also an associated increase in Ore Reserve of 44.7 million tonnes at 0.70% copper and 0.44g/t of gold.”
Evolution shares rose 3.1% yesterday to $3.64 on the expansion news, not world gold prices which weakened again in light Asian trading.
