Meeka Metals has filled its pockets to the tune of nearly $360,000 after it was awarded a research-and-development (R&D) Federal Government rebate for rare earths works undertaken at its Circle Valley project near Esperance in Western Australia.
The company qualified for the rebate through its metallurgical studies, experimental set-up and leaching of clay-hosted rare earths from the Circle Valley operation throughout the 2023 financial year. The government reimbursement comes after Meeka recently reported $2.95 million in cash reserves at the end of the June quarter, despite recent significant bargain-basement site purchases for its developing flagship Murchison gold project near the WA town of Meekatharra.
Recent site purchases for the Murchison gold project include a total camp and infrastructure package from Sandfire Resources’ De Grussa copper-gold mine, which was bought at just 20 per cent of the initially predicted cost, and a bigger-than-required ball mill that is expected to lift processing capacity by 30 per cent. Management says the mill, purchased for $318,000 at auction, reduces the expected capex outlined in Meeka’s recent DFS by 75 per cent.
The DFS numbers released in May include undiscounted pre-tax free cash flows of $577 million and an internal rate of return (IRR) of 127 per cent, based on an Australian gold price of $3500 per ounce. Today’s price is hovering at about $3675 per ounce.
The expanded mill throughput that will come with the bigger ball mill opens up the potential for new gold ore feed opportunities for the company and it means it can more rapidly process its initial 600,000 tonnes at 2 grams per tonne gold ore stockpile that is vital to its first six years of operation. Increased ore opportunities and processing capabilities could potentially lead to faster pay-off and an even higher IRR.
With greater capacity of the bigger ball mill and improved projected productivity, Meeka says it is now re-optimising its production plan with a view to presenting a revised DFS in the final quarter of this year.
Management is moving swiftly to ensure first production within the next 12 months at the Murchison project. Importantly, it recently stated that final credit-approved documentation for the bigger portion of the project development funding is expected to be completed within a fortnight.
Project funding would allow the company to progress ongoing site works infrastructure and haul roads, together with moving the 200-man DeGrussa camp and administration infrastructure. The completion of site works is expected before the end of the year.
The Federal Government’s R&D tax incentive program was designed to assist innovative explorers working on critical metals and to encourage mining innovation. With regard to Meeka, it allows it to hold a strong cash position for advancing development in the Murchison while it awaits the all-important project funding.
The company will now be hoping prospective project funding partners will see enough encouragement to go and do some back-of-the-napkin calculations on what could be some juicy numbers in a revised DFS if the gold price continues on its impressive trajectory.
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