Egan Street boosts gold resource with high-grade ounces

By Trevor Hoey. Published at Nov 27, 2018, in Mining

Egan Street Resources Ltd (ASX:EGA) has taken another key step towards developing a high-grade gold operation at its Rothsay Gold Project in Western Australia with a substantial increase in the Mineral Resource to 454,000 ounces.

The Mineral Resource Estimate (MRE) has increased by 53,000 ounces, principally from shallow extensions to the main Woodley’s Lode into areas that have historically been poorly, or not at all, tested, as well as through the identification of additional mineralisation on the Woodley’s East hanging-wall lodes.

The key Woodley’s Shear Mineral Resource increases by 46,000 ounces to 342,000 ounces, representing 75% of the total resource.

The upgrade stems from a combination of successful infill and extensional drilling completed since the last Mineral Resource update announced on May 14, 2018.

As indicated below, the increased Resource comprises 1.54 million tonnes at 9.2 grams per tonne gold for 454,000 ounces, reflecting the outstanding high-grade nature of the Rothsay Project.

EGA's increased resources.

Egan Street to benefit from Australian dollar gold price

Egan Street could be targeted by investors looking for oversold gold stocks, particularly given its relatively near-term production profile which would enable it to generate cash to fund future exploration and plant expansion.

Recent selling could only be attributed to negative sentiment towards the broader sector and extreme volatility in equities markets over the last three months.

As FinFeed recently pointed out, it should be noted that Australian producers are benefiting from a decline in the Australian dollar, and the current price of approximately $1700 per ounce delivers healthy margins when one considers production costs are generally in the order of $1000 per ounce.

As a point of comparison, when at its peak between 2011 and 2012 the gold price fluctuated around the US$1700 per ounce mark.

However, during this period the AUD:USD midrange rate was USD$1.05, implying an Australian dollar gold price of $1619 per ounce.

Consequently, our miners are better off today as the Australian dollar hovers around the USD$0.72 mark

High grades translate to low-cost production

This buoyant price environment along with stellar grades is extremely important when examining the company’s production prospects, as it indicates the strong potential to be a low-cost, high-margin project which can deliver robust financial returns.

This was highlighted by EganStreet managing director Marc Ducler who noted the strengthened economic outlook at Rothsay saying, “This latest increase in Resources paves the way for further growth in production and free cashflow at Rothsay.”

In fact, the Rothsay Project has been a highly economic operation even during the exploration stages as Ducler noted in saying, “This Resource upgrade came in at discovery cost of $30 per ounce and since the listing of EganStreet our discovery cost has averaged $35 per ounce.

“The consistency of these metrics provides further confidence that the Rothsay Gold Project will deliver value well beyond our initial production target published in July 2018.

“With the main Woodley’s Shear increasing to 342,000 ounces at around 11 grams per tonne gold, these high-grades underpin the high margins we expect once in production.”

Woodley's East Shear

Uptick in indicated resource to feed into reserves increase

Importantly, the Indicated portion of the Mineral Resource which is available for conversion to Ore Reserves has increased by 46,000 ounces to nearly 1 million tonnes at 9.6 grams per tonne gold for 292,000 ounces.

There are also strong prospects and plenty of options for resource expansion with new areas of high grade mineralisation intersected during recent drilling.

Exploration drilling programmes executed by EganStreet have intersected a third Woodley’s East hanging-wall zone of mineralisation which now forms part of the MRE.

Together, the three Woodley’s East hanging-wall zones (Woodley’s East HW), total 177,000 tonnes at 5.3 grams per tonne gold for 30,000 ounces.

These three lenses are parallel to Woodley’s and Woodley’s East Shears and are located in close proximity to the Woodley’s East Shear, making them accessible by the underground mine development in the definitive feasibility study (DFS).

The new zone is located approximately 10 metres east of the Woodley’s East Shear.

All three lenses are open in every direction and their extents are not defined, providing significant scope for further resource expansion.

Positive implications for DFS

In July, EganStreet released a DFS based on a redevelopment proposal targeting unmined fresh material which could be accessed via the existing portal and decline which requires rehabilitation.

The key findings of this DFS included production of 250,000 ounces over an initial 6.5-year mine life, with a pre-production capital expenditure estimate of $36.1 million, cash costs of $941 per ounce, and all-in sustaining costs (AISC) of $1083 per ounce.

Based on these metrics, what could be deemed as a start-up mine would be very economical at all levels.

An investment of $36 million is very modest in terms of bringing a project into production, and based on the strong Australian dollar gold price, the AISCs imply a robust margin of approximately $600 per ounce.

The November 2018 MRE extends approximately 200 metres to the south, and it is currently being incorporated into an updated mine design and schedule, which anticipates a second portal and decline due to ore strike extensions.

This has the potential to give the project greater flexibility, earlier ounces and higher sustained production rates.

With the increase in the MRE, the company is confident that the updated mine design will deliver a larger mining inventory to the DFS, with multiple mining zones providing increased ore throughput and consequently improved project value.

View Our Investment Portfolios



S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!