Manas Resources (ASX: MSR) is on the road to developing the company's Shambesai gold project, after receiving full support from the Kyrgyz Republic Prime Minister, Jantoro Satybaldiev, and local officials for the projects development.
The Prime Minister has stated that he expects the local government in the Shambesai region to support and fast‐track the immediate development of Shambesai Gold Project.
Satybaldiev made the statements during a recent visit to the Batken District when the 2014 Action Plan for socio‐economic development of the region was discussed.
Shambesai has the potential to be a simple, high-grade, high-recovery gold leach project with a BFS complete for more than 220,000 ounces of gold at US$387 per ounce. Total LOM (C3) after capital and tax is estimated at just US$676/ounce.
Mr Satybaldiev has stated that he expects the local government in the Shambesai region to support and fast-track the immediate development of Shambesai
Importantly for the rapid progress of the project, the Kyrgyz Republic State Agency for Geology and Mineral Resources (SAGMR) has approved all work plans, budgets and exploration licenses for the 2014 field season.
The submission of OVOS (Kyrgyz Republic equivalent of the Environmental and Social Impact Assessment) is imminent, with a draft document under review.
Manas is also advancing discussions with banks and institutions for the financing of Shambesai's development.
With the continued improvement in the investment climate and Central Government support for the project, this has the potential to help Manas to finalise project financing in the near future.
Planning is underway for the commencement of exploration drilling in March 2014.
SAGMR has approved all work plans, budgets and licenses for 2014 at Manas' wholly-owned exploration licenses.
In total Manas has a Resource base of 1,184,000 ounces of gold at the Shambesai and Obdilla prospects, which are only seven kilometres apart.
Manas is well-funded with $5.6 million in cash at the end of December 2013.
Support for Shambesai's development spreads
Prime Minister Satybaldiev was joined in his support of Shambesai by local mayors, heads of districts and representatives of local authorities.
The supporters have stressed the importance of developing Shambesai immediately as part of a structured support regime and the Kyrgyz Republic's Socioeconomic Development Forecast for 2013 to 2015 - as prepared by the Government of the Kyrgyz Republic.
Shambesai in lowest quartile of costs
The Shambesai Gold Project has the potential for all-in cash costs of under US$700, the project's economics place it among the lowest quartile of costs in the gold sector and envy of higher cost projects.
Manas is currently updating the Shambesai Bankable Feasibility Study, which has already delivered some impressive metrics such as:
- Net cash flow US$148M after capital, taxes and royalties (excluding financing costs) from the production of 227,000oz of gold over a 4 ½ year mine life at US$1,400 gold price;
- Average LOM cash costs (C1 costs excluding royalty) of US$387/ounce;
- Shambesai Project in lowest quartile of cash costs for gold producers worldwide;
- Total LOM (C3) after capital and tax estimated to be US$676/ounce;
- Capital expenditure to first gold pour of US$41.3M with an expected pay back of 11 months;
- After-Tax Net Present Value (NYSE:NPV) of US$105M with an Internal Rate of Return of 67% at an 8% discount rate and US$1,400 gold price; and
- Simple, low-cost vat leach and heap leach operation with projected 84.8% overall gold recovery; including +90% gold recovery for oxide material which contributes +90% of the total gold recovered.
Kyrgyz Republic's largest gold miner receives support
Centerra Gold (TSX‐CG) is the owner and operator of the Kumtor Gold Mine which is the country's largest operating gold mine which produces over 500,000 ounces per annum.
Recently Parliament adopted a positive resolution supporting the joint venture agreement between Centerra and the Government of the Kyrgyz Republic.
Investors have reacted positively to the news with an increase in the Centerra share price in the last few months.
This highlights the potential for a near-term re-rating in the value of Manas.
OVOS submission imminent
Manas said that it also looking forward to submitting its OVOS on completion of final internal reviews and translation of the final draft document.
Detailed mine and plant design in conjunction with its primary consultants, Beijing General Research Institute for Mining and Metallurgy (BGRIMM) and Asia Rud Project (NYSE:ARP), is now underway.
Basic engineering of the plant is now complete and technical and safety approvals have been applied for.
With Manas now receiving full support from the Kyrgyz Republic Prime Minister Jantoro Satybaldiev for the immediate development of Manas' Shambesai gold project - this is expected to greatly enhance financing support for the low cost and high margin project.
With approval for all work plans, budgets and exploration licenses for the 2014 field season, Manas is off to a flying start with the endorsement of the project by the Prime Minister.
Manas is currently updating the Bankable Feasibility Study, which has already delivered impressive metrics.
Shambesai has the potential for all-in cash costs of under US$700, which would place the project among the lowest quartile of costs in the gold sector in the world - and provide a gross margin of over US$600 an ounce.
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