Pantoro sets stage for key year ahead on strong gold pipeline

Pantoro Ltd (ASX:PNR) has set the stage for a key year in 2021 with strong ongoing production and robust economics from the Halls Creek Operations in Western Australia’s north providing cashflow for development of the transformational Norseman Gold Project in the state’s south. The company this week released a new investor presentation outlining its near-future plan while detailing the progress made in 2020, despite the global pandemic. Better than projected production along with firmer international gold prices helped the company record free cash flow of $7.6 million from Halls Creek Operations last quarter thus bringing total earnings from the project in the April-December period of 2020 to $16.4 million. Higher earnings helped the company to close the year 2020 with a closing cash and gold balance of $64.9 million and it is debt-free. Norseman work ramps up Surplus cash supported by better-than-expected earnings has encouraged the company to ramp-up spending at Norseman, in the Eastern Goldfields of Western Australia. Spending to date has totalled around $35 million and is being increased in the current quarter as Pantoro aims to meet sole expenditure of $50 million. EPC contract This month a Letter of Intent has been issued to GR Engineering Services (ASX:GNG) for the award of engineering, procurement and construction (EPC) works for the processing facility. The contract, worth about $57 million, includes the crushing circuit associated with the plant and will be awarded as a guaranteed maximum price contract. Pantoro's portfolio includes the 100%-owned producing Halls Creek Gold Project in the Kimberley Region of Western Australia and the 50%-owned Norseman Gold Project acquired in July 2019. The Halls Creek mineral resource now stands at 1.602 million tonnes at 6.6 g/t gold for 339,000 ounces, maintaining the inventory in line with the previous year’s result after mining depletion. Hall Creek Halls Creek has consistently reported resources in excess of 300,000 ounces of gold for the last four years while mine depletion has exceeded more than 200,000 ounces since the start of operations. The company has successfully built operations from scratch after acquiring the project in 2014 and has been able to increase proven high-grade gold ore production uninterruptedly since September 2015. Pantoro started operations at the project in February 2015 with an ore reserve of 435,000 tonnes at 6.17 g/t gold for 86,000 ounces and life of 2.5 years. The project, which predominately has underground operations, has so far produced more than 200,000 ounces over 5.5 years of operations. There are two underground mines – Nicolsons and Wagtail North producing 35,000 to 45,000 ounces. The company is unhedged and has full exposure to the current gold prices along with more than three years of an underground mine that is being continuously expanded. Strong performance Halls Creek also has more than two years of open-pit mining when underground is completed, and the company is also undertaking maiden resource estimations at satellite deposits. During the December quarter, the project recorded cashflow of $7.6 million with AISC of A$1,435 per ounce (exceeding guidance) with production of 10,143 ounces, which took the overall cumulative cash in April-December period to $16.4 million. The company undertook regional exploration at the project during the quarter with short programs completed at Grants Creek, Mary River and reconnaissance drilling on shallow near-mine targets at Nicolsons. READ: Pantoro drilling confirms ore-grade gold mineralisation at three new prospects Besides recording an increase in overall revenue, the company has been able to reduce expenditure during the past 12 months. Development at Norseman Pantoro has a 50% interest in the Norseman Gold Project and is sole manager of the JV being responsible for the development and execution of all work programs. The company is confident that the project represents a transformational opportunity through the current resource of 4.4 million ounces with strong potential for increases. With more than 130,000 metres drilled to date, Pantoro has undertaken the first substantive development and exploration drilling at the project since divestment by Western Mining in 2001. Work in the 18 months since acquisition culminated in Pantoro completing a DFS for Phase One of the project which demonstrated low capex and excellent project cashflow with an initial seven-year mine life now defined. The company is finalising contracts for the construction of the operation with this process expected to begin in the current quarter. All contracts are between suppliers and Pantoro’s 100%-owned subsidiary. Encouraged by the ongoing growth of Green Lantern Deposit at Scotia and additional high-grade results at Sailfish discovery, the company has chalked out a plan for the phase 2 drill program at Scotia Mining Centre, Mainfield and Lake Cowan during the coming months.