Theta Gold Mines (ASX:TGM, OTCQB:TGMGF) - near-surface gold developer in the Eastern Transvaal Gold Fields of South Africa


by Michael Luu

Theta Gold Mines Limited (ASX:TGM, OTCQB:TGMGF) CEO for Africa, Mitford Mundell, talks about the company's projects and its plans to bring open-pit mining to historical underground mines and exploit old workings.

Michael Luu: Hi. I'm Michael Luu for the Finance News Network. Joining me from Theta Gold Mines (ASX:TGM) is the company's CEO for Africa, Mitford Mundell. Hi, Mitford. Welcome to the network.

Mitford Mundell: Good morning, Michael. Well, afternoon in your case, I think. Thanks for having me.

Michael Luu: Thanks for joining us from South Africa. Now, for those who are new to the company, could you give us an overview of Theta Gold Mines?

Mitford Mundell: Theta Gold Mines is an ASX-listed company with a secondary listing on the US-based OTC markets. Theta's assets include over 62,000 hectares of gold mining rights in South Africa. And we currently have over 6 million ounces of combination of open cast and shallow underground resources, and a CIL plant and tailings storage facility that will be recommissioned and expanded. The current market cap is about AU$130 million.

Michael Luu: Fantastic. Now to your assets. Can you tell us more, starting with the size of your resource?

Mitford Mundell: As mentioned, just over 6 million ounces in resource. We've converted 580,000 ounces to reserve recently, based on feasibility work on underground and open cast mines. And we'll be systematically converting more resources to reserve, and expand our resources over the next few years, as we will bring multiple mines into the development plan.

Michael Luu: And what is taking place currently?

Mitford Mundell: Well, investor confidence was given a boost by the recent announcements, especially the positive financials of the phase one underground prefeasibility study, which incorporates only 16 per cent of the underground resource. And we have a clear path to first gold production and build up to 160,000 ounces per annum within the next five years. So, the current activities really therefore revolve around progressing the various projects and raising capital.

Michael Luu: And what is next in the development pipeline?

Mitford Mundell: The immediate pipeline will be progressing with the detailed planning of the phase one mine, its surface infrastructure, while doing prefeasibility studies of the next three mines. We will also be investigating the more than 40 other old mines within our mining right areas that are not reflected in our current resource statements, and which have enormous potential to expand our resources.

Michael Luu: And could you walk us through the economics of the projects?

Mitford Mundell: As mentioned, the prefeasibility study incorporates 60 per cent of the underground mineral resource. It has a payback period of 13 months from first gold. In year three it produces almost 70,000 ounces from three production units. And the life of almost eight years excludes inferred resources and delivers 241 million EBITDA. IRR of 82 per cent, NPV $91 million. The all-in sustaining cost is around $900 per ounce over the life of the mine. It actually goes down at full production to about $800. And the peak capex is $36 million.

Michael Luu: And, Mitford, what is on the horizon in terms of longer-term development?

Mitford Mundell: Well, the first three mine operations will produce 50 to 70,000 ounces and then expand to 160,000 ounces per annum with the commissioning of another three mines, with ore production of about 130,000 tons per month. The all-in sustaining costs should be under $800 per ounce, which is half the current gold price.

The long hole mining method entails the utilisation of a defined mining fleet and ancillary equipment, where one production unit will produce 20 to 30,000 ounces per annum. The strategy is basically employing seven such production units, which will give us the 160,000 ounces per annum. The first three units will be commissioned in phase one. An open cast feed will then follow later in the production schedule. The first priority was to get it into first gold, and we are well on our way to doing that. We are also excited about the expansion potential. We know that we've really only touched the tip of this iceberg.

Michael Luu: And, finally, is there anything else you'd like to add in terms of what makes your company an attractive investment?

Mitford Mundell: The share price is really undervalued at AU$130 million at the moment. Compared to our peers it is undervalued simply because of where we are in the development lifecycle. So there certainly are exciting times coming for our investors. And they can expect regular news as we progress with our development strategy.

Michael Luu: Mitford Mundell, thank you so much for your insight. And we look forward to hearing more of your updates coming in the future.

Mitford Mundell: Thank you very much, Michael.


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