TIDMCGH
RNS Number : 4758M
Chaarat Gold Holdings Ltd
30 April 2018
Chaarat Gold Holdings Limited
("Chaarat" or the "Company")
Tulkubash Feasibility Study Results
Road Town, Tortola, British Virgin Islands (30 April 2018)
Chaarat (AIM - CGH), the AIM quoted gold exploration and
development company developing the Chaarat Gold Project in the
Kyrgyz Republic, is pleased to announce the results of the JORC
compliant feasibility study for its 100% owned Tulkubash Oxide Gold
Project ("Tulkubash"). The feasibility study was independently
prepared by the UK office of Tetra Tech, Inc.
Overview
The feasibility study is based on mining a 16.0 million tonne
reserve at an average grade of 0.91 g/t gold over an initial 3.75
year mine life. Ongoing exploration will be carried out in parallel
with the project development. The Company is confident that future
exploration results will add significantly to the initial mine life
ahead of first production, to enable Tulkubash to become a
long-term cash generator to sustain the organic growth of
Chaarat.
Highlights
-- Initial reserve base of 16.0 Mt ore grading 0.91 g/t gold
containing 470,000 ounces of gold with 76.5% recovery via heap
leaching
-- Average gold production of 95,200 ounces per annum, with peak
production during steady state operations in excess of 100,000
ounces per annum
-- Annual post tax free cash flow of US$58.6 million during steady state operational period
-- Average cash operating cost of US$726 per ounce
-- All-in sustaining cost of US$831 per ounce, including all taxes
-- Initial capital expenditure of US$132 million paid back over 3.2 years
The initial post-tax net present value for Tulkubash, using a
5.0% discount rate and a long-term gold price of US$1,300 per
ounce, totals US$12.1 million with an undiscounted total cash flow
of US$36.7 million. These metrics are expected to be significantly
enhanced as ongoing exploration extends the reserve base along
strike.
Significant Potential to Extend Oxide Resource Base
The reserve and resource for the current mine life is derived
from approximately 2.2km of a defined 24 km strike length for the
Tulkubash trend, with mineralisation remaining open along strike.
Numerous occurrences of outcropping ore-grade gold mineralisation
and high-grade gold in soil anomalies have been defined along this
trend within the existing Chaarat mining and exploration
licences.
During 2017 a total of 17,240m of drilling was completed, adding
287,000 ounces of gold to Measured and Indicated Resources, over a
strike length extension of 1km, at an average all-in discovery cost
of under US$20 per ounce. Extensive exploration is planned in 2018
and 2019, with a total budget for 60,000m of drilling over the next
two drill seasons. The Company anticipates an ongoing drill budget
of 15,000m to 20,000m per year after that.
The Company sees the potential to more than double the existing
Tulkubash resources prior to the first gold pour in 2020 and
believes that exploration success will continue to add gold
resources for years after that. The Company's upcoming and ongoing
drill programs will be designed with the intent to maximise the
ratio of Resources converted to Reserves, using enhanced
understanding of the geologic controls on mineralisation and
economic constraints on Reserve classification as defined by the
Feasibility Study.
Martin Andersson, Non-Executive Chairman, commented:
"We are very pleased to have completed this key step in
implementing our strategy to make Chaarat Gold the leading gold
company in Central Asia. The feasibility study has confirmed our
belief that the Tulkubash project has the potential to deliver
strong operational cash flow over several years. With ongoing
exploration, Tulkubash can help fund Chaarat's organic growth
through the development of the 5.4 million ounce high-grade
Kyzyltash Resource.
"We are confident that the strong operational cash flow
delivered from the Tulkubash feasibility study justifies proceeding
with the construction of Tulkubash. We firmly believe that the
intensive exploration that is planned for the 2018 and 2019 field
seasons will add significantly to the Tulkubash mine life ahead of
the first gold pour in 2020. Our objective during the two upcoming
drill seasons is to add at least 100% to 150% to the existing
Tulkubash resources, which we consider a conservative objective.
This would be expected to significantly enhance mine life and
therefore the project economics."
Tetra Tech, Inc. is preparing internal technical reports
illustrating the project economics of Tulkubash based on continued
exploration success. The Tulkubash report is expected to be
completed by late April 2018. In addition, Tetra Tech, Inc is
completing an internal technical report on the development plans
for Kyzyltash based on optimal refractory ore processing options.
The Kyzyltash report is expected to be completed before the end of
May 2018. As the reports will not be JORC compliant they will not
be released publicly but will be available for review by select
parties under the terms of a Confidentiality Agreement and will
form a key part of the Company's financing strategy.
The executive summary of the feasibility study will be published
on the Company's website once available.
Key findings of the Feasibility Study
The following paragraphs summarise key aspects of the
feasibility study. The Company emphasises that it expects
significant optimisation of project economics following completion
of the proposed 2018 and 2019 exploration drilling programmes.
The key finding of the feasibility study is that it is
technically feasible and generates positive free cash flow of
approximately US$59 million per annum during full year
operations.
Reserves
The mineable reserve is 16.0Mt ore at a grade of 0.91 g/t gold
containing 470,000 ounces of gold. The reserve also contains
582,000 ounces of silver at a grade of 1.13 g/t silver. This
material has been identified as being highly amenable to heap
leaching containing virtually no organic carbon and total sulphur
of less than 0.5%. The mineralisation occurs in a highly fractured,
brittle host rock which lends itself to crushing without the
generation of excess fines and need for agglomeration.
Metallurgical Testing
The metallurgical test work supporting the feasibility study is
based on bottle roll and column leach testing. The samples were
selected to assess general amenability to heap leaching, spatial
variability and recovery as a function of grade. Wardell Armstrong
International and McClelland Laboratories Inc performed the test
work in 2017 and 2018 respectively. The final estimated
metallurgical recoveries for gold and silver, adjusted for
operating conditions, were determined to be 76.5% for gold and
61.8% for silver, respectively.
Mining
The deposit will be developed by a mining contractor using
conventional open pit mining methods. Waste and ore will be drilled
and blasted on 10m benches and excavated by 5m(3) excavators on 5m
lifts. Highway-type haul trucks of 30 tonne capacity will haul
waste to a near pit storage facility and ore 5 km to the process
facility. Mining will be conducted at an average rate of 50,000 tpd
and a strip ratio of 4.2:1 over the life of mine is expected.
Processing
Ore hauled to the run-of-mine pad will be subject to three-stage
crushing to produce a 12.5mm product at a rate of 13,500 tpd.
Crushed ore dosed with lime will be hauled to the heap by truck and
dumped in 7m lifts. Stacked ore will be heap leached for an average
of 60 days. Pregnant leach solution is collected and transferred to
carbon columns at the ADR plant. Gold and silver will be desorbed
from carbon into a concentrated solution using a modified Zadra
strip process. The concentrated solution will be subjected to
electrowinning and smelting to produce doré suitable for refining
offsite.
Heap Leach Facility
The heap leach pad covers an area of approximately 360,000m(2) .
It will be constructed to international standards for safety and
environmental protection including a double-layered HDPE/LLDPE
liner system. The solution distribution and collection systems are
internal to the heap to allow uninterrupted operation during winter
operations. The pad has a capacity of 16.0Mt and has been designed
to be expandable to allow the project to take advantage of future
expansion.
Infrastructure
Personnel on site will be housed in a camp with a nominal
capacity of 400 people. Workshop and warehouse facilities located
in the mining and process areas will serve the needs of each
respective activity. Diesel-generated power totalling 4MW will
serve process and support facilities. Roads and infrastructure have
been designed and sited to respect regulatory requirements,
minimise risk, and promote efficient operation.
Construction
Subject to financing, construction will begin in Q3 2018 and
continue until the end of Q1 2020, a period of 21 months.
Construction management will be organised as an integrated team
composed of both owner's and EPC contractor's personnel. Bulk
earthworks and pre-stripping activities will predominate through
the first winter with most facility construction occurring in 2019.
Ore stacking will begin in Q4 2019 with first gold forecast for Q2
2020.
Production
Production is planned to start in Q2 2020 and continues for 3.75
years to the end of 2023. Operations will process 4.93Mt of ore
annually once ramp-up is complete in 2020. Over the life of mine,
the project produces 360,000 ounces of gold from 16.0Mt of feed
grading 0.91 g/t. Average annual gold production is 95,200 ounces
with peak production exceeding 100,000 ounces per annum. Silver
totalling 360,000 ounces is also produced over the life of the
project.
Initial Capital Cost
The capital cost for the plant and infrastructure is estimated
at US$100.0 million with an additional US$19.7 million for
pre-production stripping. Contingency for the project is US$12.3
million giving a total estimated initial capital cost of US$132.0
million. All figures include VAT and import duties where
applicable.
The table below shows the breakdown of the capital costs.
US$ million
Pre-production operating
costs 19.7
Mining mobilisation
and development 2.5
Crushing 27.8
Indirect costs 16.5
Camp 3.1
Site utilities 8.8
Processing 26.2
Site infrastructure 11.0
Offsite infrastructure 4.1
Contingency 12.3
-------------------------- ------------
GRAND TOTAL 132.0
-------------------------- ------------
Operating Costs
The life of mine average mining cost for the project is US$1.88
per tonne mined. This cost covers both ore and waste as well as
ex-pit haulage of 5 km from the mine to the run-of-mine pad. Life
of mine process costs are US$4.75 per tonne processed. General and
administrative costs total US$1.55 per tonne processed over the
life of mine including the owner's cost for mining management,
technical support, and grade control. All costs are inclusive of
12% VAT where appropriate. This leads to a life of mine average
operating cash cost of US$726 per ounce.
Project Economics
After-tax NPV, discounted at 5.0%, for the project is US$12.1
million with an IRR of 8.2% and a modest payback period of 3.2
years. During the three years of steady state operation from 2021
to 2023 the average annual free cash flow is US$58.6 million, with
a total undiscounted life of mine cashflow of US$36.7 million.
Competent Person
The Competent Person (CP) for the Company on technical aspects
of this Press Release is Dorian L. (Dusty) Nicol, FAussIMM, a
Non-Executive Director of the Company and Chair of the Company's
Technical Committee. Mr Nicol consents to the inclusion in the
report of the matters based on this information in the form and
context in which it appears.
Enquiries:
Chaarat Gold Holdings Limited + 44 (0) 20 7499 2612
Martin Andersson - Chairman info@chaarat.com
Robert Benbow - Chief Executive Officer
Numis Securities Limited +44 (0) 20 7260 1000
John Prior, Paul Gillam (NOMAD)
James Black (Corporate Broking)
BMO Capital Markets Limited +44 (0) 20 7236 1010
Jeffrey Couch, Neil Haycock,
Thomas Rider (Joint Broker)
Blytheweigh (Financial PR) +44 (0) 20 7138 3204
Tim Blythe
Camilla Horsfall
NOTES TO EDITORS:
About Chaarat Gold
Chaarat Gold is an exploration and development company operating
in the Kyrgyz Republic with a large, high grade resource - the
Chaarat Gold Project. The Company's key objective is to become a
long term, low-cost gold producer focused in Central Asia and the
former Soviet Union.
Chaarat aims to create value for its shareholders, employees and
communities in the Kyrgyz Republic by building relationships based
on trust and operating to the best environmental, social and
employment standards.
Further information is available at www.chaarat.com
Glossary of Technical Terms
"g/t" grammes per tonne, equivalent to parts
per million
"Inferred that part of a Mineral Resource for
Resource" which tonnage, grade and mineral content
can be estimated with a low level
of confidence. It is inferred from
geological evidence and assumed but
not verified geological and/or grade
continuity. It is based on information
gathered through appropriate techniques
from locations such as outcrops, trenches,
pits, workings and drill holes which
may be limited or of uncertain quality
and reliability
"Indicated that part of a Mineral Resource for
Resource" which tonnage, densities, shape, physical
characteristics, grade and mineral
content can be estimated with a reasonable
level of confidence. It is based on
exploration, sampling and testing
information gathered through appropriate
techniques from locations such as
outcrops, trenches, pits, workings
and drill holes. The locations are
too widely or inappropriately spaced
to confirm geological and/or grade
continuity but are spaced closely
enough for continuity to be assumed
"JORC" The Australasian Joint Ore Reserves
Committee Code for Reporting of Exploration
Results, Mineral Resources and Ore
Reserves 2012 (the "JORC Code" or
"the Code"). The Code sets out minimum
standards, recommendations and guidelines
for Public Reporting in Australasia
of Exploration Results, Mineral Resources
and Ore Reserves
"Measured that part of a Mineral Resource for
Resource" which tonnage, densities, shape, physical
characteristics, grade and mineral
content can be estimated with a high
level of confidence. It is based on
detailed and reliable exploration,
sampling and testing information gathered
through appropriate techniques from
locations such as outcrops, trenches,
pits, workings and drill holes. The
locations are spaced closely enough
to confirm geological and grade continuity
"Mineral a concentration or occurrence of material
Resource" of intrinsic economic interest in
or on the Earth's crust in such form,
quality and quantity that there are
reasonable prospects for eventual
economic extraction. The location,
quantity, grade, geological characteristics
and continuity of a Mineral Resource
are known, estimated or interpreted
from specific geological evidence
and knowledge. Mineral Resources are
sub-divided, in order of increasing
geological confidence, into Inferred,
Indicated and Measured categories
when reporting under JORC
"Mt" million tonnes
"oz" troy ounce (= 31.1035 grammes)
"Reserve" the economically mineable part of
a Measured and/or Indicated Mineral
Resource
"t" tonne (= 1 million grammes)
"tpd" tonnes per day
This information is provided by RNS
The company news service from the London Stock Exchange
END
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