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Manas Resources Making Right Moves At Shambesai Gold Project In Kyrgyz Republic

Manas Resources (ASX: MSR) has been awarded a key land permit for its wholly-owned Shambesai Gold Project in the Kyrgyz Republic allowing it to immediately commence initial development works.

Discussions regarding full financing of the US$41.3 million capital requirement are also advancing and the company is confident of starting construction in the first quarter of 2014.

"We have generated excellent momentum for the Shambesai Gold Project in the key areas of permitting, community relations and project funding since the release of the May 2013 Bankable Feasibility Study," managing director Stephen Ross said.

"Based on current progress, we remain confident that we can deliver a fully financed, technically low-risk and highly-profitable gold operation at Shambesai over the next 18 months."

The company has also completed a preliminary drilling and trenching program at the Djilginsai project area 30 kilometres from Shambesai and is currently drilling at the 485,000 ounce Obdilla project. Results from both programs are expected shortly.

When the Obdilla program is completed the drill rig will move to Shambesai for exploration, geotechnical and infill drilling.

Project Permitting

The award of the "Shambesai Infrastructure Land Transformation and Land Allotment" permit rezones the project area from agricultural to industrial-use covering the infrastructure, mining and processing facilities for the construction and operation of the Shambesai Gold Project.

It allows the company to immediately commence initial development works at the Shambesai site area, including road upgrades and minor earthworks, as well as apply for final project design and construction permits.

Award of the Land Permit to Manas also provides a trigger for Manas to commence the application for final project design and construction permits, including completion and submission of the OVOS, the Kyrgyz equivalent of the Environmental and Social Impact Assessment.

The company has also recently signed a Memorandum of Understanding with the Kadamjai Regional Administration and Maidan Village Authority covering local and regional cooperation for the timely development of the Shambesai Gold Project.

Project Financing

The company added that discussions regarding the US$41.3 million financing with a number of banks and institutions from Europe and Asia is progressing well and that it is confident current interest will result in the receipt of project financing for the full capital requirements to first gold pour being available on schedule for the commencement of construction in the first quarter of 2014

The Company is now in the process of updating the Shambesai BFS schedule and capital cost expenditure timetable to reflect the current expectations for award of the final environment and construction permits, and timing for the drawdown of project finance.

Shambesai Gold Project

The Shambesai Gold Project is expected to be a simple low‐cost vat leach and heap leach operation with 85% overall gold recovery that can be commissioned in a relatively short time frame for a low capital cost.

The BFS had estimated an IRR of 67% for the Shambesai Gold Project; total life of mine costs (C3) of US$676 per ounce of gold with cash costs of US$387 per ounce; and projected net cash flow of US$148 million after capital, taxes and royalties.

Shambesai has estimated payback on capital of 11 months and is projected to process 2.54 million tonnes of ore at 3.4 grams per tonne gold and recover 227,000 ounces of gold at an average 50,000 ounces of gold per annum over a 4 and a half year mine life.

The BFS cash flow estimates used a US$1,400 gold price and are made assuming the treatment of all oxide and sulphide Reserves within the optimised pit shell, and are after all revenue-based taxes and royalties have been paid.

Manas has a Resource base of 1,184,000 ounces of gold at the Shambesai and Obdilla prospects, which are only seven kilometres apart within a total portfolio of over 3,000 square kilometres of license areas.


With the key land permit in place and financing discussions well-advanced, Manas' low-cost Shambesai Gold Project edges closer towards starting construction.

Project economics are highly attractive with relatively low technical risk and this should assist in attracting financing. This in turn paves the way for gold production to start over the next 18 months.

Manas had $6 million in cash as of 30 June 2013, which at a market cap. of $15 million, implies a dis-connect with intrinsic resource valuation and milestones within the next 6 months.

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