Kingwest Resources sets sights on advancing Menzies and Goongarrie gold projects in 2021

Kingwest Resources Ltd (ASX:KWR) is progressing towards a pre-feasibility study and near-term production at the Menzies Gold Project (MGP) in Western Australia. The company last month made the final cash and share payment to Horizon Minerals Limited (ASX:HRZ) of $1.625 million cash and 10,833,333 ordinary shares to acquire 100% of the Menzies and Goongarrie gold projects. In addition, KWR recently released an economically robust scoping study for the MGP based on an open pit mining and third-party toll treating arrangement. Robust scoping study The study presents a strong economic case for recommencing open cut mining with the total net revenue for the project estimated at $330 million using gold prices of A$2,300 per ounce and 95% recovery. Total costs for the project were estimated as $250.4 million with total operating unit costs of $104/tonne processed and $1,688/ounce produced.  Estimated free cash produced is between $95 million and $64 million with the maximum negative cashflow of $13.5 million occurring in month five with the mining lasting 31 months in total. Third-party processing Around 63% of the proposed mined material is in the measured or indicated JORC categories, with the first year of production to include 76% of the material in the indicated category. Total production will be 3.15 million tonnes at 1.7 g/t gold for 174,700 contained ounces of gold. Of the total production, the company plans to send high-grade (HG >1.2 g/t) and medium grade (MG 1.2 g/t - 1.0 g/t) material for third-party toll treatment of 2.39 million tonnes at 2.02 g/t for 147,200 recovered ounces. The remaining low-grade (1.0 g/t – 0.7 g/t) material is planned to be stockpiled for treatment in the future, possibly via a newly built plant at Menzies. Kingwest will now look to undertake a detailed hydrology, geotechnical assessment and detailed waste dump/ore dump planning which will be incorporated in more detail in the planned follow up pre-feasibility study. Strong  results to date Since recommencing drilling at Menzies in January 2021, 46 RC holes have been completed for 7,372 metres, focused on infill drilling of the current mineral resource estimates at Pericles, Lady Shenton, Stirling, Lady Harriet, Lady Irene and Yunndaga - as well as deeper extensional drilling at Pericles and Stirling. High-grade gold intersected in 2021 drilling includes: 7 metres at 7.1 g/t from 204 metres;  1 metre at 35.3 g/t from 32 metres; 7 metres at 4.3 g/t from 65 metres; and 10 metres at 2.8 g/t from 93 metres; Deep extension drilling at the Stirling target has discovered a new lode returning up to 4 metres at 3.7 g/t gold including 1-metre at 12.0 g/t from 141 metres with additional follow-up drilling planned. Updated mineral resource estimates  The extensive infill drilling campaign undertaken by the company resulted in a 170% increase in indicated resources above 1 g/t cut off and now indicated resources accounts for 46% of the total resources, up from 17% in the previous estimate. Following the upgrade, the high-grade near-surface resources at the project now total 315,500 ounces at 1.8 g/t gold with having 1.0 g/t cut off. The increase in indicated resources supports the pit optimisation and economic studies as part of a scoping study. Menzies Gold Project aerial view showing the main mineralised systems as well as the Lady Shenton and Stirling resource locations.  Goongarrie Project prospectivity Kingwest also expects to continue to realise value from both the advanced project and greenfields exploration at Goongarrie Project. The Goongarrie discovery shows extensive gold anomalism and mineralisation warranting further follow-up of near-surface targets that returned 6 metres at 17.2 g/t gold from 94 metres within 38 metres at 3.1 g/t gold from 62 metres. Follow-up drilling is planned at Target A9 as well as initial drilling of targets A1, A2, A3 and A10 which lie under the salt lakes in the north of the project. Salt lake exploration  Notably, the company has progressed exploration of the previously inaccessible major part of the Goongarrie project that lies beneath the Goongarrie Salt Lake. A high-resolution aeromagnetic study has been completed over the western half of Lake Goongarrie and a few of the resulting litho-structural targets have been tested by a program of deep geochemical pitting. This deep pitting program was limited in extent, but it has successfully located several strongly gold anomalous drilling targets under previously unexplored areas of Lake Goongarrie. A track-mounted drilling rig is scheduled to test Target A10 along with Targets A1, A2 and A3 in the second quarter of 2021.