Lunnon Metals mined 62,000t ore at 1.73g/t for 3,473oz gold in June at Lady Herial. St Ives paid $12M under the ore purchase deal. Free cash flow is tracking within 7% of the feasibility study.
Lunnon Metals (ASX: LM8) posted its strongest month to date at the Lady Herial open pit in Western Australia, mining 62,000 tonnes of ore at 1.73 grams per tonne for 3,473 ounces of gold in June. The result came despite three full days lost to rain, with total pit volume reaching just over 106,000 bank cubic metres.
Drilling and blasting finished on the 295mRL1 and 290mRL benches in the north pit and the final floor level in the south pit. The abandonment bund is 80% complete, with progressive rehabilitation and topsoil spreading continuing alongside operations.
Lunnon started mining at Lady Herial in February. The first stage is scheduled to finish in September.
An ore purchase agreement with Gold Fields subsidiary St Ives Gold Mining, signed last September, continues to run smoothly. St Ives has taken delivery of nearly 207,000 tonnes at 1.59g/t for 10,561 ounces, yielding 9,613 ounces at an agreed 91% metallurgical recovery. St Ives paid Lunnon $12 million in June, while outgoing expenses for Lady Herial in the same period came to roughly $3 million.
Total ore tonnes and gold delivered to St Ives are on target. About 90% of the overall pit volume and 66% of the gold had been mined by month end. As planned, total volumes and waste-to-ore ratios will decline as the company nears first-stage completion, improving the operating margin for the remaining months. The option to excavate select 'goodbye' cuts has not yet been evaluated; any ore from those would be additional to the planned volumes agreed with St Ives.
Managing director Edmund Ainscough said Lady Herial had set the company up for the new financial year. "Lady Herial has just a few months left but the mine has recharged our cash, reinvigorated our team, and put us in the best possible position to ensure that our first gold deposit is not our last gold discovery," he said.
The Lady Herial feasibility study released in January used a gold price of $7,000 per ounce to estimate that mining 268,000 tonnes at 1.89g/t for 16,270 ounces would yield roughly $45 million in pre-tax cash flow. The gold price has since dropped to around $5,750 per ounce. With the remaining open-pit forecast to be completed as planned, the company is on track to achieve free cash flow within 7% of the study's modelled results.
Lunnon Metals carries an Alpha Score of 65/100, rated Moderate, in the Basic Materials sector. The stock page is available at GFI stock page.
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