Mark Gordon - Senior Analyst.
Carnavale Resources is an emerging Western Australian gold developer, focused on the 80%-owned Kookynie Gold Project, located 60km south of Leonora within the Eastern Goldfields of Western Australia, one of Australia's (and the world’s) premier gold mining districts. The project contain a JORC 2012-compliant Mineral Resource of 120,000 oz Au at an average grade of 4.4g/t Au, including a coherent high-grade component of 55 koz Au @ 30.2 g/t Au.
Carnavale’s strategy is to develop a low capex, high-grade, truckable gold operation capable of supplying ore to existing third-party processing infrastructure within the Kalgoorlie region, thereby avoiding the capital intensity (and permitting/time) associated with constructing a standalone processing plant.
Since acquiring the project in 2020, Carnavale has transformed a largely unexplored exploration property into a high-grade development asset through systematic drilling, resource growth, metallurgical testwork, economic studies and permitting. The investment case is underpinned by three key factors.
Firstly, Kookynie is a high-grade resource located within an established mining district with multiple operating treatment plants and excellent infrastructure.
Secondly, Carnavale has materially de-risked the project through resource upgrades, metallurgical testwork (with recoveries exceeding 97%), completion of Scoping Studies, execution of a Native Title Mining and Heritage Agreement, and the grant of Mining Lease M40/362 that covers the entire resource inventory.
Thirdly, the defined mineralisation remains open at depth and along strike, providing further resource growth potential, with other targets also remaining to be tested.
The current Bankable Feasibility Study (BFS), which is targeted for a July completion, is building on a very robust Scoping Study, which returned undiscounted free cash flows of A$237 million over five years, and an upfront capital requirement of only A$3 million, with a maximum cash requirement of A$21 million by month 8.
All other things being equal, there is upside to the cash flow with gold consistently trading above A$6,000/oz, and with the Study using a headline price of A$5,500/oz. Assuming increased revenue goes straight to the bottom line, a A$500/oz increase potentially adds A$43.5 million to cash flows.
