Mutiny Gold: Resource upgrade meets objectives, next step gold reserves in early 2012

Mutiny Gold (ASX: MYG) continues to progress the highly anticipated Definitive Feasibility Study at the Deflector Project in Western Australia, with the latest upgrade opening the opportunity for gold Reserves to be added into the study by mid-February 2012.

The highlights from the upgrade is that; Measured and Indicated Resources increased by 600,000 tonnes; there was a 50% increase in gold ounces in resource tonnes for an extra 115,000 ounces; plus a 40% increase in resource copper tonnes for an extra 6,000 tonnes of copper metal.

Deflector is on target for commencement of production in late 2012.

John Greeve, managing director, said that the upgrade of a significant portion of the Deflector resources to the higher confidence categories of Measured and Indicated Resources, has met the company’s objectives and completes an important development step for the Deflector Project.

"Importantly the upgrade provides Mutiny with increased levels of confidence in the geology and grade of the deeper resources to the extent that a significant portion of them is eligible for conversion to reserves as part of the ongoing Definitive Feasibility Study."


Deflector - Definitive Feasibility Study

The upgrade has provided Mutiny with a major boost to the continuing Definitive Feasibility Study, with the company having engaged GR Engineering Services to head up the mechanical engineering and plant design works.

Xstract Group is conducting the mine studies and Mutiny’s in-house project manager and metallurgist, Kevin Reynolds is managing the process as well as overseeing the metallurgical test work.

Earlier in 2011 Mutiny delivered a bumper Scoping Study, which included an IRR of 83%, a NPV of $187 million – which is likely to increase significantly, and cash costs over a ten year life of mine of just A$524 an ounce.

The Scoping Study anticipates two and a half years of open pit mining followed by six and a half years of overlapping underground mining, with the study also recognising the high likelihood of expanding the production levels and extending the mine life.


Deflector - by the numbers

Deflector now has a resource of 3.4 million tonnes at 4.9g/t gold for 530,000 gold ounces, 0.85% copper for 29,000 tonnes and 5.7g/t silver for 620,000 ounces.

Measured and Indicated accounts 2.1 million tonnes at 5.2g/t gold for 350,000 ounces, 1.1% copper for 22,000 tonnes and 7.3g/t silver for 490,000 ounces. Inferred is 1.3 million tonnes at 4.5g/t gold for 180,000 ounces, 0.5% copper for 6,000 tonnes and 6.2g/t silver for 130,000 ounces.


Credit Suisse to fund Deflector into production

Providing a major vote of confidence in the Deflector operations, Mutiny has already entered into a $11 million project loan and hedging facility agreement with Credit Suisse.

As part of the facility Mutiny will forward sell 50,000 gold ounces, and recently announced the average price of A$1,847 per ounce - which is above historical Australian gold pricing.

Importantly this forward sale represents less that 10% of Mutiny’s current JORC gold resource. Under the agreement Mutiny will deliver gold to Credit Suisse over the period July 2013 to December 2016.


Future drill programs target 2m ounce operation

To continue to progression of Deflector, Mutiny has already formulated drill programs for 2012 and onwards, which is both aimed at increasing the mine life and gold ounces - with the target 1.6 million to 2.4 million ounces of gold.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23202/mutiny-gold-resource-upgrade-meets-objectives-next-step-gold-reserves-in-early-2012-23202.html