Cashed up Manas Resources (ASX: MSR) has received a major boost to the economics of the Shambesai Gold Project in the Kyrgyz Republic, Central Asia, with a pit optimisation review upgrading the project's financials.
The study demonstrates the potential for net cash flows of up to US$190 million by producing 40,000 gold ounces for an initial five years - with the metrics based on a conservative US$1500 per ounce gold price.
Providing Manas with another plus at the project a Feasibility Study including final pit optimisation on high‐value near surface oxides is forecast for completion in December 2011.
Highlights from the revised study include:
- Estimated net cash flows attributable to Indicated oxide Mineral Resource material only totals more than US$137 million over five years (EBITDA at US$1,500 gold price), with a further possible US$53 million from Inferred oxide Mineral Resource.
-The current Probable Reserve of oxide material is estimated to be 180,000 ounces over the five‐year mine life with a potential of a further 40,000 ounces from currently Inferred oxide material that is contained within the pit shell.
- Production is projected to peak at 50,000 ounces of gold per annum in year 3 and average 40,000 ounces per annum for the five years of the projected mine life from the Indicated and Inferred oxides.
- More than 75,000 ounces of gold contained within sulphide material stockpiled during oxide mining is not included in the cash flow estimates.
- Cash costs are estimated at US$370 per ounce for the first four years, US$465 per ounce for life-of-mine
The potential also remains for increased throughput, increased cash flows and increased mine life by further oxide ore discoveries and future sulphide ore treatment. Stephen Ross, managing director, commented on the good news, and said:
“We are extremely pleased with the updated cash flow numbers from the pit optimisation study which, when compared to the November 2010 Scoping Study, demonstrate that we can expect a much improved production rate and subsequent improved cash flows for the Shambesai shallow oxides alone.
“Despite this conservative approach to the mining plan focusing on the near‐surface oxide material only, project cash flows from the updated pit optimisation work have almost doubled, plus we can expect very high initial returns at a medium‐term gold price of US$1,500 per ounce of gold.
“We look forward to the granting of our mining licence and an early move into the implementation phase of the Shambesai Gold Project.”
Manas gold oxide resource
Highlighting the potential of the Shambesai gold project, recently Manas delivered a boost in the gold oxide resource.
The significance of the 40% boost to 460,000 ounces (Indicated and Inferred) of the oxide is the ease of gold extraction at a low cost, which will provide early cash flows for Manas when the company starts gold production - which is forecast to start at the end of 2012.
The high grade oxide component from the surface is 2.7 million tonnes at 3.6 grams per tonne (g/t) gold for 300,000 ounces.
The latest gold boost is not just for the oxide, with the Shambesai resource upgraded to 11.6 million tonnes at 2.1g/t for 766,000 ounces, with 60% classified as oxides.
Another major plus for Manas is when the Shambesai resource is combined with the nearby Obdilla resource, the company then has a global Indicated and Inferred Resource of 1.25 million ounces within a 4 kilometre radius.
Discovery cost just US$9 per ounce
The total discovery costs for the Shambesai resource just US$9 per ounce, with the likelihood of further gold discoveries due to the mineralised zones at the project remaining open along strike to the west and at depth.
Manas is the largest and most active gold explorer in the Kyrgyz Republic with projects located in the south of the country - and holds an extensive 4,400 square kilometre land holding.
Gold recoveries of plus 85%
Recent vat leach and heap leach test-work at an independent laboratory in the Kyrgyz Republic under the supervision of Manas has demonstrated significantly improved gold processing parameters, including higher gold recoveries, quicker leach times and lower cyanide consumption.
A bulk sample of high-grade ore greater than 8.0g/t gold was taken from zones which will be mined first at Shambesai, and was then tested in columns under conditions designed to replicate the Vat Leach process for extracting gold from the Shambesai oxide ore.
The results indicate recoveries of more than 85% can be achieved in rapid leach cycles of less than 36 hours, with very low cyanide consumption of 0.2 to 0.3 kg/t for minus 12mm crushed and agglomerated ore in vats at high solution circulation rates.
The outcome is that the test work results confirm the suitability of the process route selected for the project, providing a very low capital and operating cost ore treatment route.
A$16 million cash bounty
Last month Manas received a vote of confidence from the market, with the company entering into an underwriting agreement for unexercised options valued at $10 million. Manas now has around $16 million cash on hand.