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MINING | Egan Street Resources | ASX
EGAN STREET RE Single asset WA gold explorer looks to form the basis for growth
ESOURCES
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MINING | Egan Street Resources | ASX
Egan Street Resources is a young ASX-listed precious metals exploration company backed by a seasoned board of directors and strong management team which is focused on realising the near term potential of the highgrade, low cost Rothsay Gold Project in Western Australia. Rothsay has previously been subject to historical mineral extraction via shallow open pit and underground mining scenarios up until the 1990s, and was purchased by EganStreet in July 2011 when it operated under a previous name Auricup Resources. Since then, EganStreet has used historical data to define a mineral resource at Rothsay and recently commenced a drilling programme, the results of which will be compiled into a definitive feasibility study (DFS) and a maiden reserve due in Q2 of 2018. EganStreet’s activity on the Rothsay project has been directed by successful metallurgist Marc Ducler since his appointment as managing director in July 2016 just after the company rebranded. Ducler brings well over 20 years of experience in the mining industry to the project, having assumed senior on-site
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MINING | Egan Street Resources | ASX management positions at mines such as GoldFields’ Agnew Mine, BHP’s Mt Whaleback Mine and FMG’s Cloudbreak Mine. At the time EganStreet felt like a perfect fit for Ducler, who possesses all the skills required to take a project like Rothsay through the development stages and into production. Ducler was attracted to Rothsay for myriad reasons, including the high grade gold mineralisation present at the resource, the low cost entry into production, the wellestablished infrastructural ingredients and crucially the strong shareholder support EganStreet receives. “These high-grade golds present low capital entry opportunities to becoming a material single asset gold producer which then forms the basis for growth. Rothsay ticked that box beautifully,” says Ducler.
A board of mining professionals However, progressing any gold project necessitates a strong team of mining professionals driving forward the development stages, and EganStreet is no different in this respect. The board is dominated by industry experts such as experienced mining engineers Barry Sullivan (chairman) and Lindsay Franker, geologist and non executive director Hedley Widdup and Simon Eley, a commercial solicitor with vast experience in the resources sector.
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MINING | Egan Street Resources | ASX
The management team is comprised of
at Rothsay which has seen the completion of
geology manager Julie Reid, who counts over
28 diamond drill holes for 9.5km and 57 RC
30 years of experience in exploration and
holes for 5.1km, allowing for the upgrading of
mine geology in Australia, Indonesia and
the mineral resource estimate to 262,000oz
Vietnam, and chief financial officer (CFO)
@ 11.6g/t.
Richard Hill with over two decades of knowhow in the gold industry.
Increasing the mineral resource Since the company first floated on ASX in
Another update to the mineral resource estimate is due in the early weeks of December as further RC and diamond drill results are announced, with Ducler fully expectant of another significant increase to
September 2016, the board and management the figure. team have implemented a development programme based on increasing the mineral
“From a project development front we have
resource estimate at Rothsay, which stood at
also been extremely busy,” Ducler reports.
226,000oz @ 11.3g/t Au.
“A scoping study was released within three months of listing, six months later we
During the last 12 months the company has
released a pre-feasibility study (PFS) that
progressed an aggressive drilling campaign
doubled the production target and tripled the
ResourceGlobal GlobalNetwork Network Resource free cash flow generated to 200,000oz of gold
indicated in the lead up to a maiden resource
production and US$82 million in free cash
declaration.
flow. Simultaneously, the company is aiming “A DFS is currently being completed which
to test the prospectivity of the adjacent
is due in Q2 2018 and our expectation is to
ultramafic rock units that are showing
further increase the production target and
significant historical workings in the shape of
free cashflow with the DFS release.”
multiple 30 metre mine shafts, following the
Shareholder support EganStreet will continue its current drilling
strike of the mineralisation along the footwall and hanging wall contact of the ultramafic unit.
programme to March 2018 safe in the knowledge that its activity is supported
Consequently, EganStreet will also be
strongly by its shareholders, who have
targeting these prospective ultramafic units
supplied ample funding thus far.
along with the drilling programme, as part of its regional exploration work that will
“In September 2017 we completed a $4
commence at the end of 2017 and into early
million placement at 25 cents per share, a
2018.
25% premium to our initial list price,” Ducler reveals.
While the DFS and maiden reserve declaration is not due until Q2 2018, Ducler
“This was also strongly supported with
and his team have complete confidence in
the book closing 60% oversubscribed. We
Rothsay’s ability to deliver profitable returns
currently have $4 million in the bank and are
to its loyal shareholders.
well placed to drill strongly through to March 2018. “There are 48 million in the money options expiring in March next year and this has the potential to provide the majority if not all of the equity portion of the funding required for the development of the Rothsay Project.”
Further drilling
Healthy profit margins
Financial modelling completed at the PFS stage calculated AISC of $765 per oz against a gold price of $1,200 per oz, which represents a healthy profit margin of 57%. Furthermore, at the current gold price of around $1,300 per oz, this margin looks even better. Rothsay’s low AISC margin is shaped by the ‘fantastic’ infrastructure already in place at
This shareholder backing is contributing to
the project, where the portal and decline
EganStreet’s diamond and RC rigs drilling
is already developed down to 142 metres
programme, which is both infill, near mine
below surface, there is tailings storage
extensional and regional in nature and
facility, gazetted access roads, bore fields and
designed to move inferred ounces over to
airstrip.
MINING | Egan Street Resources | ASX
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Australian Resource Business Global Network
“IN SEPTEMBER 2017 WE COMPLETED A $4 MILLION PLACEMENT AT 25 CENTS PER SHARE, A 25% PREMIUM TO OUR INITIAL LIST PRICE” MARC DUCLER, MANAGING DIRECTOR
In fact, the only significant infrastructural
In addition, as the timing draws closer
development needed at Rothsay is a new
EganStreet will look to fill a number of key
processing plant, with the finance team
management roles for the project, and has
currently working through a DFS for the
already begun this process with the recent
facility, which will be reported in Q2 2018.
appointment of Richard Hill as CFO.
However, there are still a number of boxes
With a DFS and maiden reserve to come
that need to be ticked prior to EganStreet
in mid-2018, EganStreet is within touching
throwing all of its weight behind the
distance of taking its Rothsay Gold project off
development of the Rothsay project,
the ground.
according to Ducler.
Investment decision
Once these crucial milestones have been passed the company can cast its eyes
“That investment decision will be made in Q2
towards first gold pour and the return of
immediately after completion of the DFS and
capital to shareholders that will follow.
securing committed debt financing. We are currently working through the DFS and we
“Longer term the Rothsay project will be our
will finalise this after we update the mineral
platform for growth,” Ducler declares. “If the
resource estimate at the end of Q1.”
opportunity presents we will certainly look to grow EganStreet by greenfields exploration
In the interim, the board and management
and smart acquisitions where we can see that
team will work with regulators to ensure the
value accretion for EganStreet shareholders.”
mining proposal, works approvals and the project management plan are prepared for submission.
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Published by Anderson Murray Media Ltd
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