Kasbah Resources (ASX: KAS) has proved up the economic and technical viability of the Achmmach Tin Project, with the results from the Pre-Feasibility Study (NYSE:PFS) showing potential for net present value of US$134 million.
The company is now set to move forward with a Definitive Feasibility Study for Achmmach.
Low costs are a feature of the PFS findings, with highly competitive mine gate costs of US$65.76 per tonne of ore and project development costs, including all surface infrastructure, of US$167.
The PFS is based on an underground operation producing 1 million tonnes per annum, with a concentrator producing 6,880 tonnes of tin in concentrate each year for export to an Asian tin smelter.
Based on the 2013 Consensus tin price of US$24,407, this gives Kasbah the potential to achieve a net present value (NYSE:NPV) of US$134 million, although a base case NPV of US$79 million is also given, using a tin price of US$21,961.
Importantly, these figures could be improved based on potential capital cost reductions through optimisation of the surface infrastructure layout.
Wayne Bramwell, managing director of Kasbah, told Proactive Investors today that the PFS marks the crossing of a bridge into the final stage of evaluation at Achmmach.
"The more we work on this, the more we see that it's got a real chance," Bramwell said.
"Even with a reasonably modest tin price the project has pretty good returns.
"Going into DFS is another indication about our level of confidence with the project and we're fully funded to keep this thing going."
Ongoing exploration at Achmmach continues to increase the prospectivity of the project, with Kasbah earlier this year delivering a 150% increase in the JORC Resource.
Achmmach now hosts total resource of 14.6 million tonnes at 0.9% tin for 135,000 tonnes of contained tin.
The resource break down is; Indicated 5.3 million tonnes at 0.8% tin for 42,000 tonnes; and Inferred 9.3 million tonnes at 1.0% tin for 93,000 tonnes.
Bramwell told Proactive Investors that ongoing exploration at Achmmach was likely to increase the Resource by the time the project goes into production.
"Certainly the resource will be much larger, much higher level of confidence, i.e. a much higher tonnage of indicated resource, and we can see the grades starting to drift up too," he said.
"We are continually removing some of our assumptions and replacing them with fact and our confidence just keeps growing."
Kasbah expects to deliver the DFS for Achmmach in the December quarter of 2013, with work on the study to begin later this year.
"From here on to the end of next year it's all about feasibility," Bramwell told Proactive Investors.
"We'll certainly start the project financing in the second half of next year, then 2014 would be a year of construction and early production."
Bulk metallurgical test work for the DFS is scheduled to commence in the September quarter of 2012, followed by a Resource upgrade in the March quarter of 2013.
DFS mine planning is expected to commence in the March or June quarters of 2013.
In terms of project financing, Bramwell told Proactive Investors that Kasbah has a number of options to test prior to finalising the DFS.
"We've actually got four options, the traditional path of debt financing from a commercial bank, we've also got the opportunity of low cost debt from the IFC, our largest shareholder, and possibly JOGMEC," Bramwell said.
"Option number three is actually our other offtake partners - Kasbah's got three otherpeople on the share register; all three of those groups have some type of capacity to provide funding.
"Ideally we'd like to use the equity market least to reduce the impact on dilution on the existing shareholders."
With 135,000 tonnes of contained tin in a resource of 14.6 million tonnes at greater than 0.9% the Achmmach Tin Project is now a top five tin resource worldwide with one of the highest grades.
Two recent catalysts for Kasbah and Achmmach are a 150% increase in the Resource and the landmark deal with Toyota Group company, Toyota Tsusho Corporation, for an option to acquire up to a 20% interest in the project.
Both these achievements further de-risk the Achmmach project and position it as a strategic asset.
Toyota Tsusho is Asia's premier tin trading house and one of the largest companies in the world, trading around 8% of the global tin market and more than 50% of all tin consumed in Japan.
The investment by Toyota Tsusho fundamentally underwrites the project not just financially but as an economic and valuable asset to the tin industry worldwide.
Even further certainty over Achmmach was delivered recently with the transfer of the exploitation permits to Kasbah's Moroccan subsidiary now complete.
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