THE NSW Government has approved the development of the Tomingley gold project, Alkane Resources has announced.
Scheduled to begin production in the second half of 2013, the project is expected to generate $570 million in revenue during its 10-year lifetime. Tomingley is estimated to contain 812,000oz of precious metals, and will produce around 60,000oz of gold per year for a minimum of seven years.
The project will comprise three open pit mines that will be followed by the development of an underground operation three years into the project.
Alkane is focussed on mining heavy rare earths in NSW, and is also involved in the nearby Dubbo zirconia project.
Cash flow generated from Tomingley will help fund the Dubbo operation, which has a net present value of $1.2 billion.
Both projects are wholly-owned by Alkane and will make the company a major producer of zirconium products and heavy rare earths.
Alkane has also recently sold its 49 per cent interest in the McPhillamys gold project to Regis Resources for $73.5 million.
Alkane will receive payment in the form of shares in Regis valued at $4.20 each.
As part of the agreement, Regis has acquired 100 per cent of the project.
In a statement to shareholders, the Alkane board said that a single owner would streamline the project.
“Alkane believes that while the McPhillamys project is very worthwhile, the terms [of the joint venture] and current JV structure were not ideal, and that a 100 per cent ownership of the project would be a better development proposition for the project.
“The Alkane board has a very high opinion of the Regis management and production team, and believes that their ability to develop and operate gold projects in a very cost-efficient manner augurs well for McPhillamys, and Alkane looks forward to participating in those operations.”
The deal also includes all tenements, mining information, machinery and equipment currently part of the 2.96 million ounce resource.
The McPhillamys project is expected to produce 2.96moz of gold during its lifetime.