Saracen hits go on Thunderbox

Saracen Mineral Holdings says its Thunderbox project will enable it to double its annual gold production to 300,000 ounces a year by 2017 and join the ranks of mid-tier producers.

The company announced today that its board had approved the restart of the gold mine south of Leinster, which it acquired from Norilsk Nickel in May last year for $23 million and a 1.5 per cent royalty payment capped at $17 million.

Thunderbox has been on care and maintenance since 2007.

Managing director Raleigh Finlayson described the development approval for Thunderbox as a significant milestone for the company that would see it produce gold from multiple operations for the first time in its history.

"More importantly, this will realise our vision of joining the likes of Northern Star, Regis, OceanaGold and Evolution as mid-tier gold producers, with production in excess of 300,000 ounces per annum," he said.

"Thunderbox stage one is forecast to deliver $195 million of free cashflow over an initial 4.5-year minelife.

"The development and delivery of stage one will see more than 550,000 ounces produced over an initial 4.5-year minelife, with all-in sustaining costs of $1032 an ounce.

"Stages 2 and 3 have the potential to see production extend to in excess of one milllion ounces over an eight-year minelife at an average production rate of 126,000 ounces per annum with average all-in sustaining costs of $1057 an ounce."

The company expects to fund the $65 million Thunderbox re-start from existing cash reserves and operational cashflows from its Carosue Dam operations near Leonora.

All project approvals are expected to have been secured by April with project development expected to begin in August and first gold production planned for July 2016.

Saracen shares were up one cent, or 2.41 per cent, to 42.5 cents at 12.30pm.