De Grey Mining Ltd. said Aug. 4 that it will proceed towards a pre-feasibility study incorporating the Indee and Turner River gold projects in Western Australia's Pilbara region after a scoping study indicated that the combined project will be economically viable.

According to the study, the combined project will produce approximately 290,000 ounces of gold over a five-year life, delivering an undiscounted pretax net cash flow of A$112 million based on a gold price of US$1,250 per ounce.

The project will have a CapEx of A$78 million to be repaid in 3.6 years, plus A$18 million for a sulfide flotation and regrind circuit upgrade in the third year, to be funded from cash flow.

The C1 cash cost and all-in sustaining cost over the life of mine is estimated at less than A$1,000 per ounce and A$1,200 per ounce, respectively.

This is based on total project resources of 18.84 million tonnes at 1.7 g/t gold for 1.0 million contained ounces. Of this, 38% of resources are in the measured category and 43% are categorized as indicated.

The company commenced more detailed evaluation work programs prior to completing the acquisition of Indee Gold Pty Ltd. Metallurgical drilling is nearing completion across all resources likely to be considered in the next level of study.