Last checked at 17 Jun 2013 07:00
17 June 2013
Kryso Resources Plc
(“Kryso” or the “Company”)
AIM: KYS
SRK’S INDEPENDENT TECHNICAL REPORT ENDORSES UPDATED BFS COMPILED BY BGRIMM
Kryso Resources Plc (AIM: KYS), the mineral exploration and development company currently developing the Pakrut gold project (“Pakrut Gold Project” or the “Project”) in the Republic of Tajikistan, today announces details of an Independent Technical Report (“ITR”) completed by SRK Consulting China Limited (“SRK”) containing an upgraded JORC Code compliant mineral resource estimate (the “Upgrade”) and an estimate of contained ore reserves at the Pakrut Gold Project.
The ITR also endorses the revised capital and operational expenditure estimates, as a result of the proposed final production capacity increasing from 2,000 tonnes per day (“tpd”) to 4,000 tpd, as outlined in the updated Bankable Feasibility Study (“BFS”) compiled by the Beijing General Research Institute of Mining and Metallurgy (“BGRIMM”).
A full copy of the ITR is available on the Kryso website at www.kryso.com
Highlights:
Significant increase to Measured and Indicated JORC Code compliant mineral resource estimates compared to previous resource estimate compiled by Snowden Mining Industry Consultants (Pty) Ltd (“Snowden”) and announced by the Company on 9 May 2012 Measured resources estimate at Pakrut now 1.9 million ounces (“oz”) at 3.16 g/t gold at a 0.5 g/t cut-off (previously 1.76 million oz at 3.00 g/t gold at a 0.5 g/t cut-off) Indicated resources estimate now 660,000 oz at 2.05 g/t gold at a 0.5 g/t cut-off (previously 449,000 oz at 1.83 g/t gold at a 0.5 g/t cut-off) Proved ore reserves of approximately 1.55 million oz at 3.1 g/t gold at a cut-off of 1.0 g/t Probable ore reserves of approximately 222,258 ounces at 2.5 g/t gold at a cut-off of 1.0 g/t ITR endorses updated BFS capital and operational expenditure estimates Phase I – total capital expenditure of $176.5 million, of which approximately $15 million has already been incurred, to bring the project into production at an initial capacity of 2,000 tpd; operational cost of $38.64 per tonne Phase II - total capital expenditure of $46.5 million, which will be funded from operating cash flow from the Project once in production, to increase the project’s production capacity to 4,000 tpd; operational cost of $32.77 per tonne Sustaining capital and operational expenditure throughout the Project’s 19 year mine life of $32.7 million - funded from operating cash flow from the Project once in production SRK: the Pakrut Gold Project, as outlined in the updated BFS, is “technically and economically feasible and viable”Kryso’s Managing Director, Craig Brown, commented:
“I am delighted that SRK’s report outlines a higher JORC Code compliant mineral resource estimate in the Measured and Indicated categories. This is further proof of the substantial potential of the Pakrut Gold Project.
“The SRK report outlines that SRK believes that the development plans proposed in the updated BFS are sound and that the project is economically and technically viable. This is a great achievement for the Company as we look to progress with construction work and move towards production.
“The updated production cost figures produced by BGRIMM, and as verified by SRK, combined with the newly published reserve and resource estimates, demonstrate the economic viability and substantial potential profitability of the Pakrut Gold Project.”
Independent Technical Report
Kryso commissioned SRK to provide an ITR on the Pakrut Gold Project operations located in Vahdat Region, Republic of Tajikistan. The ITR reviewed the updated BFS produced by BGRIMM and provided an updated JORC Code compliant mineral resource estimate and maiden JORC Code compliant reserve estimate.
Kryso intends to include this ITR in the documents that it plans to submit to the Main Board of the Stock Exchange of Hong Kong Limited (“HKEx”) as part of a proposed future listing. In compiling the ITR SRK undertook three site visits to the Project and also utilised data provided by the Company.
Resource Upgrade
As part of the ITR, SRK produced an updated mineral resource estimate for the 100 per cent owned Pakrut Gold Project. The updated mineral resource estimate is summarised below.
| Cut-off (g/t Au) | Measured | Indicated | Measured + Indicated | ||||||||||||||||
| Mt | Au (g/t) | Au (koz) | Mt | Au (g/t) | Au (koz) | Mt | Au (g/t) | Au (koz) | |||||||||||
| 0.5 | 18.57 | 3.16 | 1,889 | 10.02 | 2.05 | 660 | 28.59 | 2.77 | 2,549 | ||||||||||
| 1.0 | 18.06 | 3.23 | 1,874 | 7.91 | 2.39 | 608 | 25.97 | 2.97 | 2,482 | ||||||||||
| 1.5 | 14.93 | 3.64 | 1,748 | 5.97 | 2.79 | 534 | 20.90 | 3.40 | 2,283 | ||||||||||
| 3.0 | 6.55 | 5.47 | 1,152 | 1.80 | 4.18 | 243 | 8.36 | 5.19 | 1,395 | ||||||||||
| 5.0 | 2.49 | 8.24 | 659 | 0.26 | 7.87 | 65 | 2.74 | 8.21 | 724 | ||||||||||
| Cut-off (g/t Au) | Inferred | ||||||||||||||||||||||||||||||
| Mt | Au (g/t) | Au (koz) | |||||||||||||||||||||||||||||
| 0.5 | 41.19 | 1.64 | 2,171 | ||||||||||||||||||||||||||||
| 1.0 | 30.16 | 1.96 | 1,902 | ||||||||||||||||||||||||||||
| 1.5 | 18.14 | 2.45 | 1,428 | ||||||||||||||||||||||||||||
| 3.0 | 2.87 | 4.37 | 403 | ||||||||||||||||||||||||||||
| 5.0 | 0.56 | 8.64 | 154 | ||||||||||||||||||||||||||||
Both the Measured and Indicated resource estimates are larger, and the gold grade higher, compared to the previous JORC Code compliant resource estimate compiled by Snowden, which was announced on 9 May 2012.
The Measured resource estimate at Pakrut is now 1.9 million oz at 3.16 g/t gold at a 0.5 g/t cut-off, higher than the estimate of 1.76 million oz at 3.00 g/t gold at a 0.5 g/t cut-off previously produced by Snowden. The Indicated resource estimate is now 660,000 oz at 2.05 g/t gold at a 0.5 g/t cut-off, compared to Snowden’s previous estimate of 449,000 oz at 1.83 g/t gold at a 0.5 g/t cut-off.
Ore Reserves
SRK has compiled an estimate of the reserves at the Pakrut Gold Project. A summary of the ore reserves is shown in the table below.
Summary of Ore Reserves on Each Level as of June 6, 2013
| Zone No. | High Grade (Au≥1.6g/t) | Economic (1.0g/t≤Au＜1.6g/t) | Total | ||||||||||||||||
| Tonnes (kt) | Au (g/t) | Au (kg) | Tonnes (kt) | Au (g/t) | Au (kg) | Tonnes (kt) | Au (g/t) | Au (kg) | |||||||||||
| Proved | |||||||||||||||||||
| 1 | 11,805 | 3.6 | 42,623 | 3,236 | 1.3 | 4,190 | 15,041 | 3.1 | 46,813 | ||||||||||
| 3 | 271 | 3.3 | 902 | 409 | 1.2 | 485 | 680 | 2.0 | 1,387 | ||||||||||
| Subtotal | 12,076 | 3.6 | 43,525 | 3,645 | 1.3 | 4,676 | 15,721 | 3.1 | 48,200 | ||||||||||
| Probable | |||||||||||||||||||
| 1 | 2,161 | 2.8 | 6,106 | 620 | 1.3 | 799 | 2,781 | 2.5 | 6,906 | ||||||||||
| 3 | - | - | - | 6 | 1.1 | 7 | 6 | 1.1 | 7 | ||||||||||
| Subtotal | 2,161 | 2.8 | 6,106 | 627 | 1.3 | 806 | 2,787 | 2.5 | 6,913 | ||||||||||
| Proved + Probable | |||||||||||||||||||
| 1 | 13,966 | 3.5 | 48,729 | 3,856 | 1.3 | 4,990 | 17,822 | 3.0 | 53,719 | ||||||||||
| 3 | 271 | 3.3 | 902 | 416 | 1.2 | 492 | 686 | 2.0 | 1,394 | ||||||||||
| Total | 14,237 | 3.5 | 49,631 | 4,272 | 1.3 | 5,482 | 18,508 | 3.0 | 55,113 | ||||||||||
At a gold cut-off of 1.0 g/t, the Proved ore reserves are approximately 1.55 million oz at 3.1 g/t gold at a cut-off of 1.0 g/t. The Probable ore reserves are approximately 222,258 ounces at 2.5 g/t gold at a cut-off of 1.0 g/t. The combined recovery of processing and metallurgy applied to the ore reserve estimate is 82.99 per cent.
Review of Updated BFS
As part of the ITR, SRK has conducted a review of the updated BFS produced by BGRIMM.
The ITR states that, “After a thorough review of the BFS, SRK concludes that it is designed to a high standard,” and “the arrangements of the mine development and exploitation are technically reasonable.” The report also states that SRK believes that the scope and level of the BFS are adequate for the mine construction and potential financing and that the Project is technically and economically feasible and viable.
The Company’s exploratory work at Pakrut, as well as preliminary data from its exploration targets; the Rufigar deposit and in the Sulfidnoye area, has led SRK to conclude that the exploration potential to discover gold-silver deposits is good in the area surrounding Pakrut.
In the revised BGRIMM study, endorsed by SRK, which envisages a two stage development process reaching a production capacity of 2,000 tonnes per day (“tpd”) in the first stage (“Phase I”) and 4,000 tpd in the second stage (“Phase II”), the proposed cost of Phase I, which includes construction, working capital and allowances for cost overruns is $176.5 million, of which approximately $15 million has already been incurred. For Phase II the additional capital expenditure is expected to be $46.5 million, which will be funded from operating cash flow from the Project once in production. In addition, the BGRIMM study outlines sustaining capital expenditure costs throughout the Project’s 19 year mine life of $32.7 million. This cost will be funded from operating cash flow from the Project once in production.
From Kryso’s secured loan facility, provided by China Nonferrous Metals Int’l Mining Co., Ltd. (“CNMIM”), the Company’s largest shareholder, Kryso has currently drawn down RMB 38,377,000 (approximately $6 million). The facility is made on commercial terms in two denominations of US$ 10 million and RMB 530 million (approximately US$ 83.5 million).
The designed recovery rate is 82.99 per cent and the annual gold production is expected to reach approximately 116,000 ounces at full capacity as designed. SRK believes that the development schedule can be technically achieved and the processing flowsheet and related technical parameters of the updated BFS are reasonable and viable.
The total cost of construction has increased from approximately $108 million for a 2,000 tpd operation, as outlined in the 2010 BFS, due to the planned increase to a 4,000 tpd operation and cost inflation, particularly in China, where the Company is planning to source the majority of the required equipment. While the plant will have a processing capacity of 4,000 tpd after the completion of Phase II, preliminary groundwork, such as additional foundations, a larger crushing circuit and enhanced electricity supply, has to be completed during Phase I in order to reach the final, planned 4,000 tpd capacity.
Following a review of the operational costs of production published in the original BFS, BGRIMM has published updated estimated production costs, which have been verified by SRK, of $38.64 per tonne in Phase I and $32.77 per tonne in Phase II. This equates to a life of mine operating cost per ounce of $409, an increase from the $377 per ounce stated in the 2010 BFS. The increase can be attributed to cost inflation.
SRK believes that the proposed capital costs and the Project schedule are reasonable. In addition, SRK states that it is of the opinion that the operating costs, as estimated in the BFS, are reasonable and appropriate.
The ITR cites that SRK observed, during a site visit, that environmental aspects and potential liabilities were being reasonably addressed and the associated risks were being fairly well managed.
The full SRK report is available here:
http://www.kryso.com/content/ir/ir_research_notes/ir_technical_reports/SRK_Report_for_Kryso_Pakrut%20Gold_Final_2013June04.pdf
The information in this announcement which relates to Ore Reserve is based on information compiled by Dr. Anshun Xu, Mr Qiuji Huang and Mr. Yonggang Wu who are full time employees of SRK China. Dr. Xu is a Fellow of AusIMM and Mr. Huang is a Member of AusIMM. They have sufficient experience which is relevant to the style of mineralisation and the type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration results, Mineral Resources and Ore Reserves”, the JORC Code. Dr. Xu and Mr. Huang consent to the reporting of this information in the form and context in which it appears.
The information in this announcement which relates to Mineral Resource is based on information compiled by Richard Kosacz and Dr Anshun Xu, who are full time employees of SRK China. Mr Kosacz is a professional geologist registered in British Columbia, Canada and Dr Xu is a Fellow of the AusIMM. Both Mr Kosacz and Dr Xu have sufficient experience which is relevant to the style of mineralization and the type of deposits under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 edition of the JORC Code. Mr Kosacz and Dr Xu consent to the reporting of this information in the form and context in which it appears.
For further information please visit the Company’s website (www.kryso.com) or contact:
Kryso Resources PlcCraig Brown, Managing DirectorTel: +44 (0)20 7349 9160Leonard Lee, Finance DirectorTel: +86 139 2873 3775
Investec Bank PlcJeremy Ellis, Chris Sim, Neil ElliotTel: +44 (0)20 7597 5970
XCAP Securities PlcJon BellissTel: +44 (0) 207 101 7070
Blythe Weigh CommunicationsPaul Weigh, Robert KellnerTel: +44 (0)20 7138 3204
About the Pakrut Gold Project
The Pakrut Gold Project, of which Kryso has 100% ownership, is situated in Tajikistan approximately 12km northeast of the capital city Dushanbe. Pakrut has estimated total JORC compliant resources of 4,720,000 oz Au (assuming a cut-off grade of 0.5 g/t Au) and is located within the Tien Shan gold belt, which extends from Uzbekistan into Tajikistan, Kyrgyzstan and western China, and which hosts a number of multi-million ounce gold deposits.
About Tajikistan
Tajikistan is a secular republic located in Central Asia. The country is a member of the Commonwealth of Independent States and the Shanghai Cooperation Organisation. Tajikistan hosts numerous operating precious metal mines as well as the largest aluminium smelter in Central Asia. Kryso's management team has extensive experience in the mining industry in Tajikistan.
Copyright Business Wire 2013