4th Jun 2019 11:43
LONDON (Alliance News) - Chaarat Gold Holdings Ltd on Tuesday said a feasibility study at its Tulkubash oxide gold project in Kyrgyzstan significantly increased the initial reserve base.
The JORC compliant bankable feasibility study produced a 22.2 million tonne reserve, up 39% from 16.0 million tonnes, at an average grade of 0.9 grammes of gold per tonne of ore over an initial 5.3 year mine life.
This puts the initial reserve base for Tulkubash at 658,000 ounces of gold. Average gold production is expected to be 94,000 ounces per annum with peak production during steady state operations at more than 111,000 ounces per annum.
The average cash operating cost for the mine is set to be USD678 per ounce for an all-in sustaining cost of USD819 per ounce including taxes.
Chaarat has undertaken "significant capital expenditure optimisation" at Tulkubash, cutting capital expense to USD110 million from USD132 million.
The initial post-tax net present value of Tulkubash, including a 5% discount rate and long-term gold price of USD1,300 per ounce, is set to increase to USD70 million plus with a GBP114 million undiscounted total cash flow.
"These metrics are expected to be significantly enhanced as ongoing exploration extends the reserve base along strike," Chaarat said.
Chaarat uses a new recovery model which is "based on the relationship between gold recovery and the oxidation state of the ore". Given this, the recovery has dropped from the original feasibility to 69% from 75%, although the new estimate is "far more robust".
In terms of funding, Chaarat signed a binding term sheet with Ciftay Insaat Tahhut ve Ticaret AS to enter into a joint venture and collaborate on Tulkubash.
Ciftay is expected to progressively invest USD31.5 million in the project for a 12.5% equity stake in Tulkubash, as well as in Kyzyltash project - also in Kyrgyzstan.
A large majority of the remaining capital expenditure for the projects is planned to be debt funded so at to avoid share dilution. The remaining funding is set to be secured in the third quarter of the year.
First gold production at Tulkubash is still on course to begin in 2021.
Chaarat Chief Executive Artem Volynets said: "An almost 40% year-on-year increase in Tulkubash's gold reserves demonstrates the remarkable future growth potential of the Tulkubash project. To achieve this whilst also reducing the level of capital expenditure required to bring the mine into production again illustrates the quality of this asset.
"The project team's highly successful optimization of the project improves the value of the project and decreases the risks associated with its delivery. We plan to immediately advance the project development and are confident that our 2019 drilling programme will deliver similar results, further adding to the mine life of the project."
Shares in the miner were up 1.1% at 30.73 pence in midday trade.
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