China Nonferr Regulatory News (CNG)

13 Feb 2008 07:01

Kryso Resources PLC13 February 2008 13 February 2008 Kryso Resources plc ('Kryso' or 'the Company') AIM: KYS Highly Positive Pre-Feasibility Study for the Pakrut Gold Project Highlights: •Operating cash flow before tax of US$345m•Post-tax NPV and IRR of US$115 million and 67% respectively at 10%discount rate•Start-up capital requirement of US$65 million•Average cash cost, including royalty, of US$291/ounce•Average production of over 100,000 oz per annum over life of mine•Minimum mine life of 6 years processing 1.46 Mt of ore per annum•Mineralization still open in three directions Kryso Resources plc, the mineral exploration and development company with in excess of one million ounces of JORC Code-compliant gold resources defined by GeoLogix at its 100 per cent owned Pakrut gold project in Tajikistan, is delighted to announce the positive conclusion of the Pakrut pre-feasibility study ('the Study'). The Study has been conducted internally by Kryso's technical team and used up-to-date information provided by the Company's various consultants as well as internal data. The Study envisages the development of a combined open pit and underground mine, a processing facility,and the associated infrastructure. The basis for the Study was the November 2007 GeoLogix resource estimate. TheCompany anticipates, however, that further gold resources will be outlined atPakrut by exploration in 2008 and beyond as mineralization is open to the east and west along strike, and to the south down dip. This could significantly increase the net present value and the rate of return of the project in the future. However, the Study indicates that the Pakrut project is economically viable onthe basis of the resources presently defined. Kryso Resources' Managing Director Vassilios Carellas comments: 'The pre-feasibility study for the Pakrut gold project represents an interim stage of the bankable feasibility study which is currently underway. Weanticipate its completion within the next few months and will naturally look toprocure mine development financing as soon as possible after this.' SUMMARY OF THE FINDINGS OF THE PRE-FEASIBILITY STUDY Background The estimated direct capital cost for bringing the project into production isUS$65M. Based on the interim GeoLogix resource estimate, the mine would have aminimum life of six years at 1.46Mt per annum. The forecast average cash cost,including royalty, is US$291/oz, the total pre-tax cash flow is approximatelyUS$264m, and the estimated pre-tax NPV and IRR are US$157M and 84.08%respectively at a 10% discount rate. Resource Model Based on the results of additional core drilling throughout 2007, the Companyupdated the first JORC-Compliant resource estimate produced for Pakrut bySnowden Mining Industry Consultants ('Snowden') in March 2007, with a secondresource produced by GeoLogix in November 2007. The Company prepared theelectronic database as well as the mineralization interpretations, which werethen reviewed by Snowden and GeoLogix. The JORC-compliant interim resourceestimate (including Measured, Indicated and Inferred resources) produced byGeoLogix at a 0.5 g/t Au cut-off was 15.05Mt @ 2.18 g/t Au. Drilling willcontinue this year to define more resources that will then be included inanother update to the resource in a year or so. Mining After considering several options to develop the Pakrut deposit, the Company hasopted for a combined open pit and underground mine. Initially the bulk of thefeed to the plant will be from the open pit with the underground mine providingthe bulk of the production in the latter years Metallurgy and Processing The Company proposes to treat the Pakrut ore on site producing a gravity-floatconcentrate that will then be passed through the Gekko Intensive Leach Reactor.Kryso believes that this process will not only considerably reduce the initialcapital outlay, but also will reduce the footprint of the plant required andresult in only a fraction of the ore being exposed to cyanide. While the Companyhas based its projected gold recoveries on historical testwork, studies arecurrently underway at SGS Lakefield; these results are expected soon. Based onprevious metallurgical testwork programmes, the Company expects recoveries forgold in excess of 90%. Tailings Storage Facility (TSF) The TSF will be constructed from the waste material from the open pit. Accordingto the designs submitted by the Company's consultant, the waste stripped fromthe open pit will provide a TSF sufficient to accommodate any tailings producedfrom the proposed production as well as from any additional resources that maybe incorporated into the mine plan. Environmental Studies The Company has contracted Prime Resources (Pty) Ltd, an environmentalconsultancy based in South Africa, to carry out this study along with a localenvironmental consultancy based in Dushanbe (LLC Ziderer). The study is currently being carried out in accordance with the requirements andpolicies of the World Bank and Equator Principles, and the baseline study andenvironmental and social impact assessment report will be presented in theformat recommended by the Company's consultants. Infrastructure and Utilities Access to Pakrut from the capital city Dushanbe is by a 57km sealed tarmac roadto the village of Ramit followed by a 50km dirt road along the Sardi-MiennaRiver valley. Electrical power to the mine will require a connection to the national grid totake advantage of the very cheap cost of power in the country. Process water can be extracted directly from the Pakrut River, which runs allyear round. This is easily achieved by running a water pipeline upstream forapproximately 1km from the planned site of the plant. Potable water can be obtained from one of the many local springs that flow allyear round; this water is currently being used for cooking, cleaning anddrinking. Personnel The overall policy of the Company has been to employ local employees whereverpossible; this policy will continue. The Company, however, does realise thatcertain skills are required to build a mine and these skills may not beavailable locally. Consequently it has already started to employ key expatriatepersonnel that will assist the company in achieving its goal to beginproduction. Development Strategies The Company has considered three options to develop the Pakrut gold deposit. Thepreferred option is the simultaneous development of the open pit and undergroundmine. It is estimated that the project start-up will be in the last quarter of2008 with the first full production year in 2010. Capital Costs The direct capital cost for the existing life of the project has been estimatedat US$81 million. US$37 million has been budgeted for the construction of theplant and starter tailings' storage facility, US$15 million for infrastructureand utilities, US$ 6 million for surface mining equipment and spares, and US$20million for underground mining equipment and contractor development. Projectoverheads, which include engineering studies, project management andadministration, have been estimated at US$3M. Operating Costs An open pit mining cost of $1 per tonne has been assumed. This is over 35% morethan the budgeted operating cost for 2008 for an open pit mine in the north ofthe country. This particular mine uses a mix of Western and Russian manufacturedequipment; this is also the Company's intention. The underground mining cost is based on industry standard estimating techniquesand consideration of costing information available for the proposed longholestoping method. This cost varies widely depending on geography and the specificnature of the mineral deposit. A range of possible operating costs wasdetermined ranging from $7.00/t to $14.00/t. In the event a conservative $12.00/t was chosen for the purposes of this study. The overall processing cost for Pakrut is approximately US$7.78 per tonne of oremilled. This has been calculated by reference to published data on similaroperations elsewhere in the world, taking into account local costs inTajikistan. The average total operating cost for Pakrut, including royalties, over thesix-year operating life is US$ 20.38/t Financial Analysis The following gold price forecasts for the life of the existing resources havebeen assumed based on averages of predictions from seven major institutions: • 2008 - US$ 868.54 • 2009 - US$ 876.83 • 2010 - US$ 920.60 • 2011 - US$ 1033.50 • 2012 - US$ 997.50 • 2013 - US$ 650.00 • 2014 - US$ 650.00 • 2015 - US$ 650.00 Total net cash flow after tax for the project is US$200M. This incorporates a cash cost per ounce of gold, including royalties, withranges between US$168/oz and US$365/oz, with an average of US$291/oz over thelife of the project. As with most projects of this nature, it is sensitive to the gold price, butsignificant upside potential exists at the current market price for gold. Future Work The BFS will be completed by the end of the second quarter of 2008, subject tothe completion of the various studies carried out by the Company's consultants.The following, which includes the consultant's studies, have to be completed: • The metallurgical testwork programme at SGS Lakefield, and the associated plant designs by Gekko • The geotechnical drilling in order to finalise the pit slope angles • The final open pit and underground designs and schedules • The final tailings dam design • The detailed infrastructure design and capital estimates • Detailed price schedules for all the capital equipment in order to be within 15% accuracy in the estimates • Evaluate in detail the different financing and production options available to the Company to ensure that the best financial and practical options are selected For further information, contact: Kryso Resources plcVassilios CarellasTelephone: 020 7371 0600Mobile 07970 756352 Ruegg & Co. LimitedBrett MillerTelephone: 020 7584 3663 Fox-Davies Capital LimitedRichard HailTelephone: 020 7936 5200 Orbis Equity Partners LimitedChristian DennisTelephone: 020 3178 3977 City of London PR LimitedStephen Clayson/John Greenhalgh/Ron MarshmanTelephone: 020 7628 5518 The interim results of this study have been approved for release by Dr Trevor Davenport B.Sc, M.Sc, Ph.D, MIMM, C.Eng, Chairman of Kryso Resources plc. Trevor has more than 35 years experience in the mining industry and has consented to the inclusion of the material in the form and context in which itappears. Notes: Kryso is an AIM-listed mineral exploration and development company focused on progressing the advanced stage Pakrut gold project and the exploration stageHukas nickel-copper project in Tajikistan. The Pakrut project has a JORC Code-compliant resource of 1,056,600 ounces of gold assuming a 0.5g/t cut-off grade. Furthermore, almost 85 per cent ofPakrut's JORC Code-compliant resources fall into the Measured and Indicated categories. Tajikistan is one of the more politically stable nations in Central Asia,and the Company's management team has many years of experience in the country. END This information is provided by RNS The company news service from the London Stock Exchange