Bardoc's robust DFS paves the way for flagship gold project development

Bardoc Gold Ltd (ASX:BDC) (FRA:4SF) passed an important milestone during the March quarter by delivering a robust definitive feasibility study (DFS) for the flagship Bardoc Gold Project in Western Australia. Key highlights from the DFS include: Average annual gold sales of 135,760 ounces over 8.2 years of mill production;  Life-of-mine (LOM) pre-tax cash-flow of A$740 million at a A$2,250/ounce gold price;  Pre-tax NPV (6%) of A$479 million and 41% IRR;  Pre-production capital of A$177 million with 32-month payback from production commencement; and LOM all-in-sustaining-costs (AISC) of A$1,188/ounce.  “Compelling financial returns” Bardoc chief executive officer Robert Ryan said this was the culmination of more than a year of hard work. He said: “Achieving this standout result for shareholders is a real credit to our team and further reinforces our track record of doing what we say we’re going to do and delivering on time and on budget.  “We are absolutely delighted with the outcomes of the DFS, which have confirmed the opportunity for strong long-term production and compelling financial returns from the Bardoc Gold Project, which is ideally positioned to become one of the few new gold projects of scale to come on stream in Australia over the next 12-18 months.”  Updated ore reserve  As part of the DFS, the company released an updated mineral resource estimate, with the Bardoc Project now hosting a total resource of 54.6 million tonnes at 1.8 g/t gold for 3.07 million ounces of contained gold. Ryan said: “The DFS results are underpinned by an updated ore reserve of more than one million ounces of contained gold – a 28 per cent increase over our previous reserve estimate – delivering average gold production of 136,000 ounces per annum at a highly competitive all-in cost of A$1,188/ounce over an initial 8-year mine life.  “At an assumed base case gold price of A$2,250/ounce, this will generate average free cashflow of $113 million per year post-construction, with forecast life-of-mine free cashflow of $740 million, a pre-tax NPV6% of A$479 million and Internal Rate of Return of 41 per cent – compelling metrics by any measure. “The project also has relatively low capital intensity, with a forecast pre-production capital cost of A$177 million and a 32-month payback period from production commencement.”  Exploration upside DFS optimisation will continue over the coming months incorporating highly encouraging results generated by recent exploration activities.  Ryan said: “Importantly, we also see substantial upside to the DFS, with highly encouraging exploration results continuing to be delivered across the project.  “For example, during the quarter we upgraded the exploration potential at the North Kanowna Star Project, located 29 kilometres southeast of the proposed processing plant, which offers strong opportunities for resource growth. “We expect DFS optimisation to continue over the coming months incorporating some of the exciting new results being generated by our ongoing exploration activities.”  The proposed process plant site layout. Excelsior and Zoroastrian deposits New drilling results from the Excelsior (354,000 ounces) and Zoroastrian (530,000 ounces) deposits have increased confidence in the existing mineral resource models and demonstrated continued growth potential:  12 metres at 2.17 g/t gold from 194 metres (Zoroastrian);  12 metres at 1.25 g/t gold from 171 metres (Excelsior); and  14 metres at 1.65 g/t gold from 253 metres (Excelsior).  Extensional drilling at the northern end of the Zoroastrian deposit has highlighted strong potential for continued growth in this multi-lode ore system, with further drilling planned.  North Kanowna Star Aircore drilling at North Kanowna Star (32,000 ounces) has confirmed an extensive new gold trend with multiple target zones defined over a +3 kilometre strike length, with assay results including:  15 metres at 1.11 g/t gold from 52 metres; and  7 metres at 1.95 g/t gold from 44 metres.  The results confirm that there are multiple higher-grade mineralised areas additional to the current mineral resource that require ongoing exploration to confirm their mineralised extents, with the deposit emerging as a significant long-term growth opportunity for Bardoc. Project financing progressing Debt finance discussions are well-advanced with the completion of project funding and final investment decision (FID) targeted for Q3 2021, and first gold targeted for Q4 2022.  Ryan said: “Based on the strength of these financial results, the board has given the go-ahead to progress project financing, and we are now engaging actively with banks and other financiers with the aim of making a Final Investment Decision in Q3 2021 – which would position the company to commence full commercial construction in Q4 2021 and pour first gold in Q4 2022.”  At the end of the March quarter, the company held cash reserves of A$17.96 million.  Expanding management team Ryan said: “The company has also continued to expand its team in readiness for the transition from to developer and ultimately producer. “In this regard, I was delighted to welcome Oliver Mortensen to the team as chief financial officer during the quarter. “Oliver has held previous senior roles with Newmont and Barrick and has vast experience in the Australian gold industry. “He will be invaluable to Bardoc as we move towards financing, development and production.”