Updated Scoping Study Outcomes

Positive Updated Scoping Study for Tumblegum South Gold Project

UPDATED SCOPING STUDY BASE CASE

PRODUCTION TARGET

At gold prices from A$3,000 to A$3,800/oz, the updated Production Target for the Project ("Updated Production Target") ranges from approximately:

167kt at 2.43g/t producing 11.8koz gold, to

255kt at 2.16g/t producing 15.9koz gold

The updated Production Target generates an undiscounted accumulated cash surplus after payment of all working capital costs, but excluding pre-mining capital requirements, of approximately A$9.4M to A$19.6M.

Mining is contemplated as a single campaign over approximately 18-months. Pre-mining capital and start-up costs are estimated to be approximately A$0.7M to A$1.5M.

Sensitivity of the base case scenario to gold price was assessed. Results suggest that project economics are robust for a broad range of gold prices.

Project sensitivities were examined for a range of gold prices demonstrating that Project economics are robust with positive outcomes returned for gold prices ranging from AUD$2,000 to AUD$4,000 per ounce.

A Base Case at AUD$3,400 per ounce gold price was used to assess the components of Inferred and Indicated Mineral Resources. The range of the Updated Production Target outlined via pit optimisation at the Base Case for a range of toll treatment and road haulage costs is set out below:

  • Lowest cost option – 257kt at 2.14g/t producing 15.9koz gold recovered and an undiscounted accumulated cash surplus of $15.6M.
  • Mid cost option - 181kt at 2.37g/t producing 12.4koz gold recovered and an undiscounted accumulated cash surplus of $14.7M.
  • High cost option – 170kt at 2.43g/t producing 11.9koz gold recovered and an undiscounted accumulated cash surplus of $12.0M.

Key Study Outcomes and Assumptions

The Updated Scoping Study is based on the May 2023 Tumblegum South mineral resource estimate described in Star Mineral’s announcement to the ASX on 29 May 2023[1]. The resource model was prepared by Entech, an independent competent person in accordance with the JORC Code (2012) and includes estimates classified as Indicated and Inferred. Orelogy’s study included generating an optimal pit geometry utilising Whittle optimisation software.

Based upon the resource estimate model, slope parameters and the cost structure applied, the Updated Production Target outlined via pit optimisation at gold prices AUD$3,000 to AUD$3,800/oz, ranges from approximately:

  • 167kt at 2.43g/t producing 11.8koz gold recovered and an undiscounted accumulated cash surplus of $9.4M, excluding pre-mining capital requirements.
  • 255kt at 2.16g/t producing 15.9koz gold recovered and an undiscounted accumulated cash surplus of $19.6M, excluding pre-mining capital requirements.

Approximately 60-65% of the total Updated Production Target resulting from the Updated Scoping Study is based on Indicated Mineral Resources, and approximately 35-40% is based on Inferred Mineral Resources. There is a low level of geological confidence in Inferred Mineral Resources and there is no certainty that further drilling will result in the determination of Measured or Indicated Mineral Resources or that the Updated Production Target will be realised. Although some of the Inferred Mineral Resources occur at shallow depths, there is sufficient, easily mined and readily accessible Indicated Mineral Resources within the optimum shell to enable stockpiling of at least half of the Inferred Mineral Resources to be deferred to the latter processing (starting after month 12 or later) of the Project. This will mitigate the risk to the project as it can be grade controlled and resampled prior to processing.

No allowance was made for capital or start-up costs in the optimisation analysis stated above. The capital and start-up costs are comprised of the costs associated with, but not limited to mobilisation, site establishment, pre-mining earthworks, access and haulage road and demobilisation. These costs have been estimated for the purposes of the Updated Scoping Study at approximately $1.1M and can be represented as a range from $0.7M to $1.5M to reflect the accuracy of cost parameters used in the study which is +/- 35%. To estimate working capital requirements, an approach was taken to produce mine schedules for the range of options at the Base Case gold price at AUD$3,400 per ounce, was evaluated using the same cost and revenue assumptions, with the maximum cash drawdown allocated as working capital.

Based upon this approach the total working capital requirements were estimated to range from approximately $1.0M to $2.4M, with $1.7M for the Mid cost option. The pits for each option are estimated to have a mine life of less than 15 months with maximum cash drawdown occurring between months 3 to 5.

To achieve the range of outcomes indicated in the Updated Scoping Study, funding of the order of approximately $2.8M (based on a range of between $1.7M to $3.9M) will likely be required for capital, start-up costs and working capital requirements.

Star Minerals TumbleGum South Gold Project Tumblegum South Gold Deposit Optimised Pit Plan Over Geology.

Figure 4: Tumblegum South Gold Deposit Optimised Pit Plan Over Geology

Star Minerals Tumbelgum South Gold Deposit Cross Section Through Optimised Pit (refer Figure 4).

Figure 5: Tumblegum South Gold Deposit Cross Section Through Optimised Pit (refer Figure 4)

 

 

[1] See Star Minerals Limited (SMS) ASX announcement dated 29 May 2023 ‘Tumblegum South Mineral Resource Update’