The Ernest Henry operation. Image: Evolution
Evolution Mining has doubled the copper and gold reserves and extended the mine life to 2040 since it purchased the Ernest Henry mine outright in January 2022.
The completion of Ernest Henry’s mine-extension pre-feasibility study (PFS) – announced on Monday – has seen the mine’s ore reserve increase 126 per cent from a December 2022 estimate to 77.4 million tonnes, with contained copper increasing 103 per cent to 589,000 tonnes and contained gold jumping 124 per cent to 1.11 million ounces.
The PFS indicates the mine extension could deliver approximately 655,000 ounces of payable gold and 375,000 tonnes of payable copper, delivering an internal rate of return of 28 per cent (based on a base case of $2400 per ounce of gold and $12,000 per tonne of copper). This equates to a net-present value (NPV) of $690 million.
Capital costs would be $450–500 million, with 60 per cent of this supporting development below the 750mRL (metres relative level). Majority of the capital would not be required until the 2026–27 and 2027–28 financial years.
Ever since Evolution acquired 100 per cent of Ernest Henry, the company has been aggressively exploring the project, regularly announcing resource upgrades and increases in the mine’s copper potential.
Evolution has also announced its board has greenlit capital investment for the expansion of its Mungari plant in WA, with a $250 million investment to boost throughput from 2 million tonnes per annum (Mtpa) to 4.2Mtpa.
“Mungari has demonstrated its capacity to consistently and reliably deliver approximately 135,000 ounces per annum in recent years,” Evolution managing director and chief executive officer Lawrie Conway said.
“This plant expansion unlocks the very large regional resource base, reduces all-in-sustaining costs (AISC) by 18 per cent to $1750 per ounce, extends the mine life out to 15 years, and grows production to over 200,000 ounces post commissioning.
“The expansion was always envisaged and formed part of our due diligence when we acquired the Kundana and East Kundana properties in 2021. Having successfully integrated the operations, this is now the next logical phase of making Mungari a cornerstone asset of Evolution.”
Evolution has also announced a restructure of its debt profile which it said will unlock an additional $445 million of liquidity over the next three years. The restructure included a $US200 million ($303 million) US private placement (USPP) and the replacement of existing $590 million term loan facilities with a reduced four-year, $300 million loan.
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