GREAT NEWS and the stock doesn't even trade. Is it that bad out there:-(
Kazakhstan Minerals Corp -
Positive feasibility study for Varvarinskoye
Kazakhstan Minerals Corp KMC.UShares issued 244019811998-06-10 close $0.35Thursday Jun 11 1998Mr. Tony Williams reports Kazakhstan Minerals has received the results of the final feasibility study recently completed on the 86 per cent owned Varvarinskoye gold/copper deposit in northern Kazakstan. The study has identified a resource within a three square kilometre mining allotment containing 4.96 million gold equivalent ounces and an initial mineable reserve of 2 million gold equivalent ounces. The study concluded that the project is both technically feasible and economically viable. An environmental impact assessment has concluded there are no environmental issues that will preclude development. On this basis and in view of the positive project economics, KazMinCo intends to seek project financing. Key Study Conclusions Using metal prices of $325 (U.S.) per ounce for gold and 90 U.S. cents per pound for copper: A geological resource of 4.96 million gold equivalent ounces; Proven and probable mineable reserve of 2 million gold equivalent ounces (20.83 million tonnes at 2.98 9/t gold equivalent); Production of 182,000 gold equivalent ounces per year for the first three years. An average annual production rate of 120,000 ounces over the 11 year mine life; Cash operating costs in years one to three are $156 (U.S.) per gold equivalent ounce and $163 (U.S.) per equivalent ounce for the first five years. Life of mine costs average $188 (U.S.) per equivalent ounce; Start-up capital of $87.4-million (U.S.), payback in 3.4 years; and On an all equity, pretax basis, the project generates an IRR of 12.9 per cent and a zero discount NPV of $59.86-million (U.S.). The Varvarinskoye deposit is 130km south west of Kustanai in northern Kazakstan. Excellent road and rail links, combined with reliable sources of water, energy and skilled labour, will assist the rapid development of a new mine. Between 1995 and October 1997, KazMinCo completed 30,700 metres of diamond drilling in 174 holes, supplementing 131,000 metres of drilling and 3,000 metres of underground development performed by the Soviet geological survey between 1985 and 1990. All of the geological and assay data derived from this work have been independently audited and verified by western consultants. Mintec Inc. used these data to calculate a resource, at a 0.5 g/t gold cut-off, of 96.3 million tonnes grading 1.15 g/t gold and 0.25 per cent copper (1.62 g/t gold equivalent) containing 4.96 million gold equivalent ounces. Within this resource an initial mineable reserve of 20.83 million tonnes, grading 1.90 g/t gold and 0.57 per cent copper (2.98 g/t gold equivalent), containing 2 million gold equivalent ounces, has been established. This includes 4 million tonnes of near surface chalcocite rich ore, termed powder ore, a result of supergene enrichment in the weathering zone. The deposit can be exploited using open pit methods, with ore mined from a series of five pits and approximately 70 per cent of the tonnage being produced from a single, central pit. An optimum mining rate of 1.5 million tonnes of ore per year has been established, giving a forecast initial mine life of 11.25 years. Associated waste rock and overburden total 105 million tonnes resulting in a waste to ore stripping ratio of 6: 1. The primary fresh sulphide ore is amenable to a combined flotation and cyanide leach treatment route, with resultant recoveries of 77 per cent for gold and 78 per cent for copper. A flotation concentrate averaging 22 per cent copper and 37 g/t gold will be produced and railed to a smelter. Average annual production over the life of the mine will be 120,000 gold equivalent ounces at an average cash operating cost of $188 (U.S.) per equivalent ounce, inclusive of smelter and refining charges. During years one to three, mine output will average 182,000 gold equivalent ounces at a cash cost of $156 (U.S.) per equivalent ounce. In years one through five, cash costs will average $163 (U.S.) per gold equivalent ounce. Over the project life, 807,000 ounces of gold and 72,000 tonnes of copper will be recovered from the fresh sulphide ores (1,247,000 gold equivalent ounces); approximately 50 per cent of the gold will be produced as dore at the mine site. Four million tonnes of the chalcocite rich powder ore is planned to be treated by bacterial heap leaching, as practiced at the Girilambone (Australia) and Quebrada Blanca (Chile) mines. Bench scale testing of powder ore at a Canadian laboratory has indicated that a recovery of 80 per cent of the copper is possible, resulting in the production of an additional 16,100 tonnes of copper (98,000 gold equivalent ounces). The likelihood of delineating additional reserves of powder ore is considered high, especially to the south and east of the mining lease within the company's adjacent 525 square kilometre exploration licence. Bateman advise that from commencement of detailed engineering to plant commissioning a period of 24 months is required. Assuming metal prices of $325 (U.S.) per ounce gold and 90 U.S. cents per lb for copper, on a pre-tax 100 per cent equity basis, the project generates an internal rate of return of 12.9 per cent with a zero discount NPV of $59.86 (U.S.) million and payback in 3.4 years. The upside potential of higher metal prices is substantial; at a gold price of $350 (U.S.) per ounce and a copper price of $1 (U.S.) per pound, the IRR improves to 20.0 per cent with payback in 2.6 years and a NPV of $99.5-million (U.S.). Start-up capital costs have been estimated at $87.4-million (U.S.), including $4-million (U.S.) of working capital. This estimate has two components: plant, mine fleet and infrastructure totalling $80.4-million (U.S.) estimated to an accuracy of approximately 15 per cent; and, the powder ore heap leaching element estimated at $7-million (U.S.) to an accuracy of 30 per cent. There are a number of areas where optimization studies may further enhance the project economics; particularly, a further analysis of power supply options and negotiation of improved concentrate sales. Additionally an evaluation of the resources remaining at the end of open pit mining, including the potential for an underground operation merit investigation. In view of the low metal prices used, KazMinCo views the outcome of this feasibility study as very positive. The low cash operating costs associated with this sizeable mineable reserve, which has expansion potential especially in the immediately adjacent 525 square kilometre exploration licence area, provide the project with substantial economic resilience. Discussions with identified and interested financial institutions have begun with the aim of developing the Varvarinskoye deposit into a producing mine. (c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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