Bellevue Gold has busy quarter as it closes in on becoming high-grade, long-life gold producer

Bellevue Gold Ltd (ASX:BGL) made strong progress during the March quarter as the company closes in on becoming a high-grade, long-life gold producer in a tier-1 location in Western Australia. In February, the company released the stage 1 feasibility study for the Bellevue Gold Project, outlining a 750,000 tonnes per annum mining and processing scenario designed to be easily expanded to accommodate future exploration success.  This study was based on an indicated resource of 1 million ounces at 11.4 g/t gold, including a maiden probable ore reserve of 2.7 million tonnes at 8 g/t for 690,000 ounces with the life of mine (LOM) plan containing around 29.6% inferred mineral resources. Productive quarter Bellevue managing director Steve Parsons said it was an extremely productive quarter for the company on several levels. He said: “We are rapidly closing in on our objective of being a high-grade, long-life gold producer in a Tier-1 location. “We are continuing to drill with the aim of further increasing the resource, which will help underpin ongoing growth in our production profile, mine life and cashflow generation.” Stage 1 feasibility study forecasts The stage 1 feasibility study forecasts that the project will generate $1.6 billion of EBITDA over the LOM and an average free cashflow of $190 million a year (pre-tax).  This projected cashflow underpins a robust internal rate of return of 58% and payback period of just 1.4 years (pre-tax). Bellevue’s forecast strong financial performance is based upon an annual LOM production rate of 151,000 ounces a year over a 7.4 years mine life (average of 160,000 ounces per annum in years 1 to 5) and a LOM all-in sustaining cost (AISC) of $1,079/ ounce. Parsons said the feasibility study showed the project met all key investment criteria and had an outstanding future underpinned by high-grade mineralisation and needed nothing more than conventional mining and processing methods. The project also has strong growth potential, with new discoveries and additional high-grade mineralisation identified subsequent to the feasibility study cut-off in November 2020.  Results of drilling undertaken since the September quarter of 2020 are expected to be incorporated into a stage two feasibility study, which is already well-advanced. Marceline discovery During the March quarter, the company continued to target immediate LOM and reserve growth opportunities in high margin or early mine life areas, increases to the mine life and optimisation of free cashflow.  New zones of mineralisation near to the planned development have the potential to benefit the already fully costed access development. There were highly encouraging drill results returned from a major target at the Marceline Lode and two new emerging discoveries in the immediate mine area, named Lucknow and Lucien. Geotech drilling has been completed with the intention of including small open pits in the project ore reserves at the Tribune, Vanguard and Hamilton areas. Conversion of further inferred resources to indicated resources will be ongoing during the project development period. A maiden mineral resource of 310,000 ounces at 9.7 g/t at Marceline discovery was announced subsequent to the quarter-end. The Marceline resource includes an indicated component of 130,000 ounces at 10.1 g/t. Including Marceline lode in the stage two feasibility study will benefit from $10 million of development capital and 2 kilometres of decline that has already been included and costed in the stage one study. As a result, the maiden resource at the Marceline lode is expected to lead to a lower level of capital intensity on a per ounce basis. In light of the strong results, Bellevue is accelerating the drill program at Marceline and the adjacent Deacon North area with the aim of growing and upgrading the resource for inclusion in the stage two study. Development at Paris decline The Paris decline has now progressed more than 1,300 metres, with the underground mining contractor managing to advance an improved 233 metres per month on average in both fresh and rehabilitated development during the quarter.  BGL is more than halfway through the stage 1 development and on track to finish the current mining contract works towards the end of 2021. Construction continued underground during the quarter with the establishment of high voltage (11KV) power from the surface power station down to the 1380 level and commissioning of the first underground substation.  Improvements have been made to the primary ventilation network with the sealing of ventilation walls connected to the old decline areas. Project director appointed During the quarter, the company appointed highly experienced mining executive Rod Jacobs appointed to the new role of project director. Jacobs, who was a lead independent consultant on the Bellevue feasibility study, has held senior operating roles with IGO Ltd (ASX:IGO) and Doray Minerals. He is a qualified mining engineer with more than 30 years’ operational and senior management experience. In these roles, he has overseen major project studies, permitting, site operations, merger and acquisition activity and project management. At Bellevue, Jacobs will drive optimisation of the recently released feasibility study and construction of the required infrastructure to bring the high-grade Bellevue Gold Project into production.