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Manas Resources' BFS Delivers High Margins For Shambesai Gold Project

Manas Resources (ASX: MSR) has completed a Bankable Feasibility Study confirming that its wholly-owned Shambesai Gold Project in the Kyrgyz Republic is a low‐cost, high‐margin gold project that is technically simple.

Key takeaways from the study, carried out by with Perth‐based independent engineering consultants Mintrex Pty Ltd include:

- Total life of mine costs (C3) of US$676 per ounce of gold with cash costs of US$387 per ounce;
- Projected net cash flow of US$148 million after capital, taxes and royalties;
- Capital expenditure to first gold pour of US$41M with an expected pay back of 11 months; and
- Post‐Tax Net Present Value (NYSE:NPV) of US$105M with an Internal Rate of Return of 67%.

The BFS is based on a Proved and Probable Reserve of 2.54M tonnes at 3.4 grams per tonne gold for 277,000 ounces of gold as well as a gold price of US$1,400 per ounce.

"We are extremely pleased with the positive outcomes of the BFS for Shambesai which has confirmed, following independent review and as expected, a technically low‐risk and highly‐profitable operation which is expected to pay‐back all capital requirements within the first year of production," managing director Stephen Ross said

"The completion of a full BFS allows us to continue to pursue project finance opportunities with a great degree of confidence in attracting the most commercially beneficial terms possible for Manas shareholders.

"We are also encouraged by the recent open support in the Kyrgyz media from the Government of the Kyrgyz Republic for the development of the Shambesai gold project."

Shambesai Gold Project BFS outcomes

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

All non‐refractory oxide and sulphide ore above a cut-off grade of 2g/t gold will be treated using a two stage vat and heap leach process route while lower grade ore will be treated using a heap leach only process route.

This has a projected 84.8% overall gold recovery; including more than 90% gold recovery for oxide material, including a greater than 80% contribution from the vat leach.

Refractory sulphide ore will be similarly split between high‐value, high‐grade ore greater than 2g/t gold and low‐grade ore prior to being pre‐treated to encourage oxidation before being stockpiled.

This refractory ore will then be treated on the heap leach after treatment of non‐refractory oxide and sulphide ore is completed. Refractory sulphide ore only accounts for about 9% of all ore processed.

While the Shambesai BFS is primarily focused on treatment of high‐value oxide ore from an initial open pit, the ability to process sulphide ore through this simple process route will allow the re‐evaluation of potential reserve and production expansion through incorporating further material from the 697,000 ounce Shambesai Mineral Resource.

Shambesai will have an average annual throughput of more than 550,000 tonnes of ore producing on average 50,000 ounces of gold per annum assuming treatment of all oxide and sulphide Reserves falling within the initial planned Stage 1 Pit.

The Stage 1 mine design, which is same concept as per the April 2012 Definitive Feasibility Study, targets extraction of the shallow, high‐grade oxide portion of the Measured and Indicated Mineral Resource at Shambesai with subsequent processing of all oxide and sulphide Proved and Probable Reserves that falls within the design pit shell.

Upside potential also exists with the company starting a 10,000 metre drilling program shortly that is designed to increase resources at both Shambesai and Obdilla.

Manas is continuing to meet internal schedules to complete licensing and permitting this calendar year at Shambesai.

This will allow construction to commence in early 2014 and first gold pour in the last quarter of 2014 as per the BFS Project Schedule.

The company also continues to pursue various financing options for Shambesai that can now be accelerated in conjunction with the completion of the BFS.

Notably, the Shambesai Gold Project remains included in the Kyrgyz Republic's "Medium‐Term Social and Economic Development Program from 2013 to 2015" resolution with tax income from production scheduled for inclusion in the State budget in 2014.

Kyrgyz has a 3% revenue tax, 3% royalty, 2% sales tax and 2% community tax on gross revenue.


With the Bankable Feasibility Study estimating an attractive IRR of 67% for the Shambesai Gold Project, Manas Resources can now pursue project financing opportunities that will allow it to progress it towards production on the best terms.

Assisting the cause, the projected high margin from total life of mine (C3) costs versus current gold price is attractive. In fact, the OPEX of US$676 per ounce would represent one of the lower quartile costs in the world.

Further progress in project financing has the potential to significantly re-rate the company's current market capitalisation of $18.29 million.

Manas had $3.85 million in cash as of 31 March 2013 and had finalised a $5.1 million capital raising in early April.

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