New Murchison Gold (ASX: NMG) has accelerated plans to develop the high-grade Crown Prince deposit at its Garden Gully gold project in Western Australia with the completion of a positive feasibility study and the release of an ore reserve estimate.

The feasibility study has identified a pre-tax cash flow of $226 million over a period of 30 months at current spot gold prices of approximately $4,385 per ounce.

The new ore reserve estimate for Crown Prince has come in at 0.89 million tonnes at 4.8 grams per tonne, containing 140,000oz of gold.

Gold ore agreement

The release of the study results and the ore estimates comes after the company entered into a binding agreement in mid-December with Westgold Resources (ASX: WGX) subsidiary Big Bell Gold Operations (BBGO) in relation to the purchase of gold ore from the Crown Prince deposit.

Crown Prince is located near Meekatharra, about 33 kilometres by road from the Bluebird gold processing plant owned and operated by BBGO.

Westgold and New Murchison have been working collaboratively on the ore purchase agreement to manage technical risks and share the economic synergies available.

Tax loss offset

The study also confirmed that capital expenditure of $5.4m would be required to commence production, which is low relative to peer gold projects.

New Murchison may also be able to utilise its substantial tax loss position to offset tax liabilities on initial pre-tax profits from Crown Prince.

Those losses stood at $84.4m as of 30 September 2024, of which $76.4m is available for this purpose.

Mining to commence in June

Mining at the site is expected to commence in June 2025, with New Murchison expecting first ore sales in August 2025.

Chief executive officer Alex Passmore said the feasibility study results had provided a sound basis for proceeding with mining at Crown Prince.

“Feasibility work to expand the mineral resource, optimise the overall mine plan and derisk the project in 2024 has contributed to the successful advancement of the project,” he said.

“The Crown Prince deposit is modest in size but high grade, particularly in the Southeast Zone (SEZ), [which] supports early positive cash flows.”

“The SEZ is a new discovery where ore is available close to the surface, so 2025 will be another year of rapid progress to production for New Murchison Gold.”