The open pit project is estimated to have an initial capex cost of about US$108 million and payback of less than two years, with a pre-tax IRR of 73% and NPV of $231.6 million.

OZ is in the process of taking over CentroGold's owner Avanco for A$444 million in cash and shares.

CentroGold was assessed by Avanco as a 2.5 million tonne per annum operation targeting three deposits, with average annual production of 129,000oz (for 11 years), at AISC of US$862/oz.

CentroGold was reported in February as having two million ounces of gold, with "continued and substantial resource growth … expected".

The issue at the project is the suspending of granted environmental and construction licenses when CentroGold was previously held by a third party.

However Avanco has been confident the approval can be regained.

OZ's interest in Avanco is understood to be principally a function of the junior's copper potential.

Avanco shares closed Friday at 16c capitalising it at A$393 million, which OZ shares were at $9, giving it a capitalization of nearly $2.7 billion.

Disclosure: The reporter holds shares in OZ