Manas Resources' (ASX: MSR) has delivered updated JORC Resources and Reserves for its Shambesai Gold Project in the Kyrgyz Republic, with 95% of the Resource now in the Measured and Indicated categories.
A new geological model was developed by CSA Global and Manas which resulted in the updated Resources and Reserves.
The total Measured, Indicated and Inferred JORC Resource now totals 8.1 million tonnes at 2.69 grams per tonne (g/t) for 697,000 contained gold ounces (0.3g/t gold cut‐off for oxide resources and 0.75 g/t for sulphide resources).
The updated estimate has increased the confidence levels to include 1.2 million tonnes in the Measured category, including 1 million tonnes oxide and 0.2 million tonnes sulphides, and increased Resources in the Indicated category by 1.1 million tonnes.
Meanwhile, the total high grade oxide Resource from surface increased more than 15% to 2.43 million tonnes at 4.4g/t for 346,000 contained gold ounces.
Stephen Ross, managing director, commented: "We are extremely pleased with the results of the Resource and Reserve re‐estimation which uses adjusted cut-off grades to better reflect the oxide and sulphide mine plans.
"In particular, the significant overall increase in ounces within the high value oxide mineral Resource and Reserve provides a much higher confidence level in our estimates for debt financing purposes."
Based on new pit optimisations and preliminary mine design, a Proved and Probable Reserve totalling 2.5 million tonnes at 3.4g/t gold for 277,000 contained gold ounces have been identified to be economically minable by an initial open cut pit.
Debt financing and permitting progress
Ross told Proactive Investors today Manas has engaged Optimum Capital to begin debt financing negotiations.
He also said permitting is progressing very well, with the Detailed Design and ESIA submission due next month.
The new Resource and Reserve estimates for Shambesai will be used to form the basis of the Bankable Feasibility Study and for the detailed mine design.
Manas is currently working to finalise the Bankable Feasibility Study with Perth‐based mining and engineering consultants Mintrex.
The company is also planning to begin further drilling at Shambesai and Obdilla, and is also continuing discussions in regards to project financing.
Most recently, Manas secured a mining and development licence for the Shambesai Project.
The mining and development licence secures legal tenure for the company over the deposit area and allows the design, construction and commissioning phases of the project to go ahead.
Low cost gold production is expected to start in 2014.
Shambesai could produce 245,000 ounces of gold at an average OPEX of $411 per ounce and CAPEX of US$32.6 million from 2014.
This would deliver a net cash post-payback of US$107 million at US$1,100 per ounce which would increase to US$151 million at US$1,600 per ounce.
Manas has increased the confidence of the Resource as well as confirmed a Proved and Probable Reserve that is economically minable by an initial open cut pit, both of which further de-risk the Shambesai Project development.
Additionally, this means an increased level of confidence for the modifying factors, including pit design, as most of the project development studies have been completed to Feasibility Study level.
These new Resource and Reserve estimates will form the basis of the Bankable Feasibility Study, which is currently being finalised.
Just as importantly, Manas is advancing towards the securing of debt financing with the appointment of Optimum Capital to begin negotiations.
There is near term news flow ahead:
- Completion of Bankable Feasibility Study;
- Commencement of drilling;
- Awarding of first permits; and
- Securing of complete project financing package.
The company remains well funded as it heads towards production, with around $5.8 million in the bank at the end of December 2012.
Manas is on the road to near term, potentially low cost gold production with a number of catalysts/milestones that should see the re-rating of the company's market cap. of $29.7 million and share price of $0.13 as it approaches production and transformation from explorer to producer. A share price of between $0.17 and $0.19 would not surprise as it reaches milestones.
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