Avnel Gold Mining Ltd. [AVK-TSX] has released results from a definitive feasibility study (DFS) for its Kalana Main project in southwestern Mali, West Africa with an effective date of March 1, 2016. The company is reporting a maiden mineral reserve of 1.96 million ounces of gold and an updated measured plus indicated mineral resource estimate of 3.06 million ounces of gold for the Kalana Main project. The key performance indicators reported in this news release are based upon 100-per-cent ownership of the Kalana Main project. (All amounts are in U.S. dollars unless specified otherwise.)
Feasibility study highlights
Project economics (base-case gold price of $1,200/oz):
- After-tax 8-per-cent net present value: $196-million;
- After-tax internal rate of return: 38%;
- Payback period: 1.2 years from start of commercial production.
During first-five years:
- Average annual production of 148,000 ounces at a total cash cost of $507/oz and an average on-site all-in-sustaining cost (AISC) of $595/oz;
- Average mill head grade of 3.6 grams per tonne gold with gold recovery of 94.6%;
- Average annual throughput of 1.35 million tonnes milled.
Over 18-year life of mine (LOM):
- Total production of 1.82 million ounces with gold recovery of 92.7%;
- Average annual production of 101,000 ounces at a total cash cost of $695/oz and an on-site AISC of $784/oz.
Maiden mineral reserve declared of 1.96 million ounces:
- 21 million tonnes of ore at a grade of 2.80 g/t gold containing 1.92 million ounces;
- 700,000 tonnes of existing tailings at a grade of 1.80 g/t gold containing 40,000 ounces to be hydraulically mined and processed prior to commissioning the new mill.
- Initial net capital expenditure of $163 million; gross initial capital expenditure of $196-million (including contingency) and working capital of $8 million offset by $41 million from gold production prior to commercial production;
- Sustaining capital expenditure of $123-million.
Project construction schedule
Key project milestones after start of construction:
- Month 16: commence prestrip;
- Month 17: commence processing tails through new carbon-in-leach (CIL) section of the plant;
- Month 22: commence hot commissioning of mill;
- Month 25: commercial production.
Updated March, 2016, mineral resource for the Kalana Main deposit utilizing a $1,400/oz gold price:
- In-situ measured plus indicated resource of 23.0 million tonnes grading 4.14 g/t gold containing 3.06 million ounces at a 0.90-gram-per-tonne-gold cut-off;
- In-situ inferred resource of 1.7 million tonnes grading 4.51 g/t gold containing 240,000 ounces at a 0.90-g/t gold cut-off;
- The diluted (internal and external) measured plus indicated resource of 35.7 million tonnes grading 2.78 g/t gold containing 3.20 million ounces;
- Tailings of 700,000 tonnes at a grade of 1.80 g/t gold containing 40,000 ounces.
The Kalana project is owned by Societe d’Exploitation des Mines d’Or de Kalana S.A. (Somika). Avnel has an 80% equity interest in Somika and the Malian government holds a beneficial interest in the remaining 20%, which has anti-dilution and free-carry rights. Somika owns and operates the Kalana gold mine, a small, Soviet-era, underground gold mine and holds the rights to the Kalana exploitation permit, a combined exploitation and exploration permit that is subject to the 1999 mining code and is unique in Mali. The permit covers a surface area of 387.4 square kilometres and was last renewed in 2003 for a term of 30 years. This permit is host to 29 exploration targets, including the Kalana Main project, the company’s flagship development-stage project, which is the subject of the DFS.
Kalana Main definitive feasibility study
The DFS was led by Snowden Mining Consultants Pty. Ltd. with the support of several leading consulting firms, all of which have extensive experience in Mali, including Ivor Jones of Denny Jones Pty. Ltd., DRA Projects (Pty.) Ltd. and Epoch Resources. The key performance indicators reported in this news release are based upon 100-per-cent ownership of the Kalana Main project.
For more details refer to company press release at www.avnelgold.com