Forrestania's Tycho Gold Plan Tied to Maiden Reserve and High Sensitivity to Gold Price

Forrestania Resources has put a price tag on its Tycho gold plan in Western Australia, revealing a maiden probable ore reserve of 14,700 ounces. This underpins 100% of the company's pre-feasibility study, which outlines an eight-month operation at the Tycho Deposit within the MacPhersons Reward project.

The study estimates AU$9.9 million of pre-tax free cash flow at a base-case gold price of AU$5,500 an ounce, with total project capital standing at AU$11.5 million and an all-in sustaining cost (AISC) of AU$3,849 per ounce.

However, the mine's short life and high upfront costs make it highly sensitive to the gold price, with Forrestania noting that a 12% increase in gold prices would boost pre-tax free cash flow to AU$18 million, while barely affecting AISC.

This means Tycho's operation serves as a gold-price barometer, with its AU$11.5 million capex turning an eight-month mine into a proxy for the market's expectations of future gold prices.