Theta Gold Mines Ltd (ASX:TGM) (OTCMKTS:TGMGF) is set to become a sustainable gold miner with more than 6 million ounces of resources as it advances plans for trial mining later this year at the Starter Theta Pit Gold Project in South Africa.
In preparation for mining, geotechnical drilling and geophysical survey are underway at the pit.
Chairman Bill Guy said: “This activity is another crucial step in our ongoing project development works which are progressing to plan and are not delayed.
“We have an exceptionally busy program underway at the Starter Theta Pit. We are also finalising engineering plans for roads and infrastructure, another critical mine development milestone, and getting prepared for trial mining which is scheduled for late in the year."
Selection last month of experienced mining contractor Digmin Group for the starter project will allow TGM to rapidly mobilise trial mining operations once final permitting has been achieved, expected in the fourth quarter of 2020.
The trial mining phase includes two box cuts in the future Iota and Browns Hill pits, during which final mining equipment and grade control practices will be selected.
Following the trial mining phase, it is anticipated that Digmin will also do some of the bulk earthworks and civils as part of the project infrastructure establishment.
Post-permitting and trial mining, the final mining contract is expected to be negotiated with Digmin.
Mine schedule optimised with gold boost
The company has optimised the mine schedule for the Theta Starter project, which has added 40,000 ounces of gold on top of the May 2019 feasibility study.
This new schedule improves project metrics, has a reduced environmental footprint, reflects an increase in the annual production rate to 600,000 tonnes from 500,000 tonnes, includes mining several old mine waste rock dumps and increases overall mine operational flexibility.
The total capital cost is US$31.4 million at 16.00 ZAR/USD, compared to the 2019 feasibility study cost of $34.3 million at 14.01 ZAR/USD.
The company believes the project is commercially viable across a range of gold prices.
Benefits shown from the optimised study running at $1,500/ounce vs the 2019 feasibility study base case at $1,257/ounce include:
➢The IRR nearly doubling from 65% to 123%,
➢Mine life increasing from five years to more than 6.5 years,
➢EBITDA increasing by $50 million over the LoM to $150 million, and
➢NPV increasing by $35 million to $85 million.
In addition, the optimised study has shown an all-in sustaining cost (AISC) for the LoM of US$855/ounce and a reduced payback period from 14 down to eight months.
Theta Gold Mines holds a range of prospective gold assets in a world-renowned South African gold mining region, which includes several surface and near-surface high-grade gold projects.
The core project is next to the historical gold mining town of Pilgrim’s Rest, in Mpumalanga Province, 370 kilometres northeast of Johannesburg.
It has a five-year plan which targets four mine developments:
➢Theta open-pit Starter project (MR83);
➢Theta open-pit extension (MR341);
➢Rietfontein underground mine; and
➢Beta underground mine.
COVID-19 no impact
The company said its work program had not been affected by the COVID-19 lockdown measures.
Mining operations in South Africa are deemed an essential service and as such, its operations have been continuing with mine site development activities on-site remaining on-track.
Its on-site team has completed all the necessary paperwork and safety protocols.
In July, the company’s share placement was oversubscribed, with the miner raising $4 million.
The funds will be used to accelerate the Theta Starter Project as well as for general working capital requirements.
Guy said: “The new funds provide us with the necessary financial flexibility to continue pre-development activities on the Theta project.
"We have a very active works program underway and we will provide shareholders with a steady stream of updates as we hit key milestones on the way to construction commencing.”
The company will issue 16,667,084 fully paid ordinary shares at $0.24 per share.
OTCQB shares DTC-eligible
The company’s OTCQB shares TGMGF are now eligible for electronic clearing and settlement through The Depository Trust Company (DTC) in the United States after DTC eligibility was approved.
Theta’s ordinary shares are now tradable in both Australian dollars and the US dollars over the two markets conveniently during both trading sessions.
The company's managing director Robert Thomson stepped down from executive duties with effect from August 5, 2020, but will remain on the board as a non-executive director.
Theta’s project activities in South Africa will continue uninterrupted under its chief executive officer George Jenkins, who is based at the mine site.
Another promising South African gold play
According to Far East Capital, the company is in a very good position as the gold price is making its resources look more valuable as each month passes.
Funding the development is going to be much easier now than at any time in the last five years and the short lead time to production, from simple open pit mines, is another positive.
Analyst Warwick Grigor in his weekly commentary in July 2020, said underground mining will provide the long -erm future for Theta.
Local community support
The local mayor and residents have signed a petition of support for Theta Gold’s open pit and underground gold mining operations. A letter from the mayor and the petition will be presented to the government formally at a later date.
The company has been actively involved in various Pilgrim’s Rest social projects including the local school support, cooking and heating fuel for community, school infrastructure repairs and the Sabie Feeding Scheme.
It plans to help the local primary school get permanent water supply, as well as help with the maintenance of school facilities and provide additional educational toys and learning equipment.