Significantly the facility does not require Ballarat to enter into any hedging arrangements, with the company expecting to be able to repay the facility from the likely exercising of $33 million worth of 15c options by September.

Ballarat, which is dual-listed on AIM, said it now expects to begin accessing ore at the site in the third quarter and to commission the process plant in the fourth quarter of this year, citing the identification of additional resources close to the existing decline as the impetus for earlier production.

The pre-feasibility study, released in June last year, was based on the mining of 13.7 million tonnes at 8.4 grams per tonne (diluted), however the resource was upgraded by 57% to 1.1Moz after the completion of an 18-month drilling program in February.

Ballarat said it expects to ramp-up production at the project to 200,000 per annum, at a cash cost of $274/oz, within three years.

The required level of capital is expected to remain at the level prescribed in the pre-feasibility study estimate of $55 million. In July last year the company raised $27 million which it said would assist in financing the project.

The project has been evaluated at an assumed gold price of $525/oz and generates an IRR of 34%. The real pre-tax NPV of the project is $254 million at a discount rate of 7%.

The plant construction contract was expected to be finalised shortly.

Shares in Ballarat Goldfields closed up 7% yesterday following the announcement, and were up a further 9% at 24.5c in midday trade.