Thunderbox financing set

Partners LionOre Mining (LIM-T) and Australian-listed Dalrymple Resources have formally decided to immediately go ahead with the Thunderbox gold project in Western Australia.

With statutory and other regulatory approvals received and a four-year limited recourse finance facility from Macquarie Bank in hand, construction at Thunderbox is slated to begin during the first quarter of 2002. Perth, Australia-based GRD Minproc will be in charge of the construction effort.

The partners plan on awarding contracts for open pit mining, site accommodation and others over the next few days. After a review of the major contracts, the pre-production capital estimate (on a 100% basis) has been scaled back to US$33 million, from the US$38 million estimated in the bankable feasibility study. Part of the decrease is owing to the acquisition of a large part of the back-end of the treatment plant from the Mt Todd gold mine in Australia’s Northern Territory.

Thunderbox is envisaged as an open-pit operation focussed on a reserve of 10.9 million tonnes running 2.43 grams gold per tonne at an assumed gold price of US$254 per oz. and a cutoff grade of 0.7 gram for oxidized material and 1.1 grams for primary material.

Initially, the plan is to treat 3.5 million tonnes of oxides in the first year, followed by 2 million tonnes of primary ore in each of the following four years. In all the operation is expected to produce more than 800,000 oz. gold. Conventional carbon-in-leach and elution circuits will follow single stage crushing and semi-autogenous and ball-mill grinding. Recovery from oxide ore is pegged at 96-98% and 92-96% from primary ore after 24 hours under leach. Plant construction is expected to last nine months.

Cash costs over the life of the mine are pegged at US$157 per oz., and US$110 per oz. in the first year thanks to the higher grades and softness of the oxidized material.

Thunderbox’s first gold production is scheduled for the fourth quarter of 2002. Gold hedging covering about half the production over the five-year mine-life has recently been completed through Macquarie Bank at a flat forward price of US$293 per oz., about US$35 per oz. better than assumed in bankable feasibility study. Macquarie Bank is also providing a cost overrun facility (if required), and a guarantee facility to provide statutory environmental bonds. The Macquarie Bank facilities are secured only against the project and surrounding tenements.

Thunderbox is part of the Wildara joint venture. LionOre manages the joint venture, in which it has a 60% interest; Dalrymple has 40%.