Kingsgate Consolidated Limited - Nueva Esperanza Pre-Feasibility Study
Kingsgate Consolidated (ASX:KCN) has released a Pre-Feasibility Study for the Nueva Esperanza Gold-Silver Project in Chile. The 12 year project has an NPV5 of US$168m, an IRR of 25% and generates an average 91,000oz gold equivalent at an average mine cash cost of US$706/oz AuEq60. Capital and operating costs have decreased markedly since the previous study on the project.
- Economics - The Pre-Feasibility Study (PFS) delivers positive economics, with a pre-tax NPV5% (1) of US$168 million and an IRR of 25% based on a US$1,200 per ounce gold price and US$19 per ounce silver price.
- Production - The Project delivers an average 91,000 ounces per annum AuEq60(2) for 11.6 years at a life of mine average cash cost (including royalties) of US$706 per ounce AuEq60 and an average All-in cost of US$913 per ounce.
- First Five Years - Mine plan optimisation delivers a three-year payback period and a strong first five years production with an average 135,000oz pa AuEQ60 at an average cash cost (including royalties) of US$633 per ounce.
- Reduced costs - The study confirms the potential for reductions in the order of 25% lower capital and processing costs versus 2012 estimates (from an unpublished Feasibility Study) are achievable.
- Capital Costs(3) - Capital cost estimate of US$206 million based on a fit-for-purpose approach.
- Operating costs - Operating cost estimates have seen significant reductions, with processing costs down 38% to ~US$16 per tonne compared to the previous study (October 2012). Substantial savings have been realised in power costs and consumables.
- Ore Reserve - has increased and now stands at 1.1 million ounces AuEq60, at a grade of 2.0 grams per tonne AuEq60 of oxidised mineralisation contained in three open pits.
- Resources - the total Mineral Resource base stands at 1.9 million ounces AuEq60, at a grade of 1.5 grams per tonne AuEq60 (See ASX:KCN release dated 13 April 2016, “Nueva Esperanza Mineral Resource Update”).
Experienced Pacific Rim gold producer, Kingsgate Consolidated Limited (Kingsgate or the Company) (ASX:KCN) is pleased to announce the completion of the Pre-Feasibility Study for the development of the 1.9 million ounce (Moz) gold equivalent (AuEq60) Mineral Resource in the Nueva Esperanza Project (the Project), located in the Atacama Region of Chile.
The PFS was developed as an optimisation of previous feasibility studies completed on the Project, incorporating an updated Ore Reserve, revised plant layout, and updated economic analysis.
Updated flowsheets, capital and operating costs completed in conjunction with engineering company Ausenco confirm the viability of an open pit operation with a 2 million tonne per annum agitated leach process plant, which for the first 5 years, can deliver an average 135,000oz AuEq60 per annum production at an average cash cost (including royalty) of US$633/oz
Based on these encouraging PFS results, the company is progressing feasibility studies and permitting in calendar 2016. This will allow the consideration of development options in 2017. Kingsgate will be concurrently undertaking significant exploration drilling programs with the aim of increasing the mineral resource and improving the mill feed after year 6 in the mine plan.
“We are delighted with the study outcomes which confirms Nueva Esperanza as one of the exciting emerging precious metals projects in South America.
“The Pre-Feasibility Study reinforces the growth strategy for Kingsgate following the divestment of Challenger and Bowdens.
“The proposed development of Nueva Esperanza, subject to financing and approvals, provides Kingsgate with a solid platform for growth in Chile and other areas of South America. “We are confident that further exploration success will continue to build the metals inventory of the Project, leading to a long life operation.
“Following these positive results, we are aiming to complete permitting and a Feasibility Study in 2017, which will allow us to make an investment decision thereafter.”
Chief Executive Officer, Kingsgate Consolidated
To view the full announcement click here.
(1) NPV5% = Net Present Value.
(2) Gold Equivalent: AuEq (g/t) = Au (g/t) + Ag (g/t) ÷ 60. Calculated from long term historical prices of US$1,200/oz for gold and US$19.00 for silver and combined life of mine average metallurgical recoveries of 80% Au and 84% Ag estimated from test work by Kingsgate. It is Kingsgate’s opinion that all elements included in the metal equivalents calculation have a reasonable potential to be recovered and sold. Although gold is not the dominant metal, gold equivalent values are reported to allow comparison with Kingsgate’s other projects. Nueva Esperanza silver equivalent: AgEq (g/t) = Ag (g/t) + Au (g/t) x 60.
(3) Capital cost estimate as at September Quarter 2015, accuracy level is -25% to +25%.