Aphrodite Gold (ASX: AQQ) is planning to build a oxide and refractory gold plant capable of processing an initial 1 million tonnes of ore per annum, the first in the Kalgoorlie region for the past 20 years.
Besides processing ore from its Aphrodite Gold Deposit, the plant is also anticipated to process third party ore, substantially improving project economics and extending the project life.
The plant, which can be expanded to process up to 1.5Mt of ore per annum, include a pressure oxidation circuit - a first in the region - that will enable treatment of refractory ore which is common in the region.
Recoveries based on tests on Aphrodite material are projected at around 95% for oxide ore and 90% for refractory ore.
"The history of the Eastern Goldfields bodes well for building a much needed new refractory ore processing plant. Such development will lift the prospects of regional miners and explorers and would be a bonus for the City of Kalgoorlie," chairman Peter Buttigieg said.
"The Company's plan is underpinned by a multiple financing strategy. In addition to its channel to large China-based investors, the company will complement this with existing funding partners and advanced gold hedging strategies being developed by its financial advisors."
Aphrodite is in negotiation with China-based investors to buy into the Aphrodite Gold Project. It had previously appointed three specialist funding advisors including Noah's Rule and Australian National Merchant Capital Investments an intermediary for the China-based investors.
The self-named Aphrodite Deposit will be the cornerstone for initial production at the project.
This is expected to start in late 2015 at an initial rate of about 30,000 ounces per annum from oxide material. This will increase to more than 100,000 ounces per annum.
The Aphrodite Gold mine and processing plant prefeasibility study is at an advanced stage with no significant technical obstacles identified to date. Infrastructure in the region is well developed including ready access to power supply, road transport and labour.
Aphrodite had just yesterday increased the gold resource at the Aphrodite Project by 35% to 1.4 million ounces of contained gold.
This is based on a cut off of 0.5 g/t gold applied to potential open pit mineable resources (0 to 150m (240mRL) below surface) and 3.0 g/t for the underground mineable (primary) resources.
Mine operating life is currently projected at near 10 years, although there is strong potential for expansion from additional exploration.
The plant and its components are being designed by project engineers Tetra Tech, and consultants METS. Tetra Tech is one of the world's largest engineering companies with more than 350 offices and 14,000 staff worldwide. METS (Mineral Engineering Technical Services) is an Australian-owned leading consultant to the global mining industry.
Importantly, the plant's economic operating life is likely to be significantly increased by unlocking the neighbouring resources.
Aphrodite has already begun negotiations with a number of more advanced regional gold companies for off take agreements or to sell their ore to the company.
2 Million Ounce Resource - potential to treat lower grade gold
Interestingly, with this week's recent resource upgrade to 1.4 million ounces of gold, if the cut off grade is varied to 0.3g/t gold for the open pit resource and 2.0g/t gold for the underground resource, the total resource increases to 1,974,000 ounces.
We believe Aphrodite could be investigating with another Australian company the potential of a bio heap leach operation that could process the lower grade ore, further enhancing project economics depending on the U.S. dollar gold price or Australian dollar at the time. This could also find favour with other regional or satellite gold deposits.
There is wind at Aphrodite's sails, we wouldn't be surprised to see investment from the recently announced discussions and negotiations with Chinese and local groups. The fact no "red flags" have been encountered on the Pre-Feasibility Study, which is at an advanced stage is significant.
Any news on the financing front or bio heap leach initiative or regional processing hub could be expected to add accretion to the market valuation of Aphrodite.
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