19 May 2016 07:00
HIGHLAND GOLD MINING LIMITED
Kekura Resource and Reserve Estimate and Pre-Feasibility Study
19 May 2016
Highland Gold Mining Limited ("Highland Gold" or the "Company") announces results from a JORC (2012) compliant mineral resource and ore reserve estimate for the Kekura project reported in the framework of a pre-feasibility study (PFS) recently completed by international consultancy Wardell Armstrong International (WAI). The results corroborate the previously-announced Russian-compliant reserves (C1+C2 category) approved by regulators last year. An executive summary of the WAI (2016) report will be available shortly on the Company's website (www.highlandgold.com).
The updated mineral resource estimate is based on a database comprised of 671 drill holes totalling 114,681 metres and incorporates data from the Company's drilling campaigns in 2013 and 2014. At a gold cut-off grade of 1.0 g/t Au, the following mineral resources were estimated for the Kekura project:
Kekura Mineral Resource Estimate* (cut-off grade 1.0 g/t)
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Resource Classification | Tonnage(Mt) | Au Grade (g/t) | Metal Au (tonnes) | Metal Au (Moz0 |
Measured | - | - | - | - |
Indicated | 7.412 | 8.64 | 64.04 | 2.06 |
Inferred | 3.266 | 4.80 | 15.68 | 0.51 |
Total | 10.678 | 7.47 | 79.72 | 2.57 |
*Notes:
- Compliant to JORC Code 2012
- Mineral Resources are reported inclusive of any reserves.
- Mineral Resources have been constrained using a US$1488/oz conceptual open pit.
Relevant technical studies have been completed to the level of pre-feasibility facilitating the estimation of ore reserves for the Kekura project as tabulated below:
Kekura Ore Reserves Estimate **
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Ore Reserve Classification | Mine Type | Tonnage [Mt] | Au Grade [g/t] | Metal Au [tonnes] | Metal Au [Moz] |
Proven | - | - | - | - | - |
Probable | Open Pit | 4.296 | 10.94 | 47.00 | 1.51 |
Underground | 0.541 | 9.04 | 4.89 | 0.16 | |
Total |
| 4.837 | 10.73 | 51.89 | 1.67 |
** Notes:
- A Gold price of US$1,150 per troy ounce has been applied.
- Cut-off Grade of 2.2 g/t Au is applied to the open pit and 4.2 g/t Au to the underground mine.
- Rounded figures may result in small tabulation errors. Ore Reserves have been estimated under the 2012 Edition of the JORC Code.
The current PFS envisages as a preferred economic option for the development of the project a sequential and combined open-pit and underground operation with an estimated mine life of 8 years, a maximum combined ore production rate of up to 830 ktpa, and a mill capacity of 800 ktps. Gold mineralization at Kekura is essentially non-refractory and can be recovered through a conventional gravity/flotation with respective cyanidation flowsheet, with expected total recoveries exceeding 85%. A conceptual economic analysis estimates capital expenditures of approximately US$188 million, significantly lower than previous evaluations.
Key Project Parameters***
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Item | Unit | Total |
Post-Tax IRR | % | 38 |
Post-Tax NPV (5%) | US$ m | 357 |
Milling Capacity | ktpa | 800 |
Average Annual Production (LoM) | k oz | 209 |
Capital Cost Estimate | US$ m | 188 |
Payback Period | Years | 3 |
*** Notes:
- A Gold price of US$1,150 per troy ounce has been applied.
- Further information on the PFS is available in the Executive Summary, to be released on the company website.
An infill drilling programme of 25,000 metres is currently in progress at the eastern flank of the deposit and is expected to be completed by Q3 2016. The programme is aimed at further upgrading and increasing the project's resource and reserve base through the conversion of Inferred category resources and areas with as-yet unclassified gold mineralization.
The license area also hosts several gold mineralised prospects in the immediate vicinity of the Kekura deposit, which are subject to further exploration and provide additional upside potential for the Kekura operation.
The Company has initiated processing plant design work and is undertaking additional studies with the objective of advancing the results of the PFS to a feasibility stage level.
Kekura, located in the Chukotka region in Russia's Far East, is the Company's flagship development project. Substantial exploration work and technical studies have already been completed at the site to date, with a view towards beginning production in 2018-2019.
Information contained in this release with respect to drilling and resource / reserves statements has been taken from the report "Pre-Feasibility Study for the Kekura Gold Deposit" and prepared in compliance to the JORC Code 2012 by a panel of qualified industry experts of Wardell Armstrong International Ltd. (WAI) for Highland Gold Mining. The PFS report has been signed off by Mr. Mark Mounde, Technical Director WAI, and Mr. Phil Newall, Managing Director WAI, who have verified the information pertaining to the PFS in this release. They have sufficient experience relevant to the style of mineralisation and type of deposit under consideration to qualify as Competent Persons as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves".
FOR FURTHER INFORMATION, PLEASE CONTACT:
Highland Gold | John Mann, Head of Communications+ 7 495 424 95 21Duncan Baxter, Non-Executive Director+ 44 (0) 1534 814 202 |
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Numis Securities Limited(Nominated Adviser and Broker) | John Prior, James Black Paul Gillam +44 (0) 207 260 1000
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Peat & Co(Joint Broker) | Charlie Peat+44 (0) 207 104 2334 |
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Glossary
JORC - Widely accepted standard for reporting mineral resources and ore reserves established by the Australasian Joint Ore Reserves Committee.
Mineral Resource - concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
Inferred Mineral Resource- that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Indicated Mineral Resource - that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.
Measured Mineral Resource- that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Mineral Reserve - the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.
Probable Mineral Reserve - the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
Proven Mineral Reserve - is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.