KENTOR Gold has approved development of its $A14.8 million Murchison gold project in Western Australia at the initial rate of 24,000 ounces with production to start in June.
The start of production at the project, which comprises the Burnakura and Gabanintha gold and copper-gold deposits, will be undertaken as part of a four-phase expansion strategy.
Initially, ore will be sourced from a combination of open pit and underground mining at Burnakura over 3.5 years, while the second phase, which will include the addition of a parallel heap leach operation, is targeted to start sometime next year.
Current resources stand at an inferred 15.1 million tonnes grading 1.5 grams per tonne for a contained 719,000oz, while a 20,000m reverse circulation drilling program is designed to upgrade it by April.
To this end, the company expects to spend $4 million on exploration at the property over the coming 12 months and is currently achieving drilling rates of 250m a day.
Cash on hand for the group stands at $33 million.
However, cash operating costs are tipped to reach as much as $1223 per ounce during the early stages due to the low initial throughput rate of 260,000 tonnes per annum.
The company has already spent $2 million on the property and a feasibility study on its development is due to be released shortly.
An expansion of the carbon in pulp plant to 500,000tpa will be undertaken as part of stage 3 and will be followed by the inclusion of flotation to produce a copper concentrate from the copper-gold ore.
Work is already well advanced on reactivating the former mine and plant and metallurgical recoveries are expected to be good, based on previous gold recoveries of 94% from underground ore.
Heap leach testwork is advancing and Kentor managing director Simon Milroy said necessary equipment had already been purchased.
While Gabanintha hosts a current inferred resource of 4.5Mt at 1.4gpt gold for a contained 203,000oz, Milroy told MiningNews.net previous open pits developed by Dominion Mining on the property ended in copper ore and all remained open at depth.
“Dominion only mined the gold down to the base of oxidation which was around 60m but they did record half a dozen holes to depths of 60-100m which intersected copper and gold,” he said.
The pits currently contain around 5m of water.
Milroy said results from a heliTEM survey flown over the property also defined a number of drill targets which would be followed up.
Numbers for Burnakura stand at 10.6Mt at 1.5gpt gold for 516,000oz.
The move follows the suspension of activities at its 80%-owned $US96 million ($A89 million) flagship Andash copper-gold project in the Kyrgyz Republic after delays in obtaining a social licence for its development, prompted when the government called for work to stop at the site in June last year over environmental concerns.
However, Milroy was hopeful of resuming activities at the site over the next month or two.
The company was forced to suspend development at the site early last year due to protests from local residents, who had blocked access.
The project is targeted to produce 70,000oz of gold and 7400 tonnes of copper over an initial six-year mine life.
If and when Kentor is granted a social licence for the project, it expects first production to come within a year of regaining site access.
The company also has the Jervois project in the Northern Territory where it is investigating the feasibility of developing a large, high-grade copper-silver resource which contains 150,500t of copper and 9.7 million ounces of gold based on 11.9Mt of ore grading 1.3% copper and 25.2gpt silver.
It also has an exploration target of 5-10Mt with grades ranging from 0.75% to 1.25% copper for a contained 50,000-100,000t of copper and 10-25gpt silver for a contained 3-5Moz of silver, based on a 0.5% copper cut-off grade.
With an exploration budget of $A3.5 million for the coming 12 months, a scoping study on Jervois is due in April based on a 1.5 million tonnes per annum flotation operation.
Shares in Kentor were down 4% in morning trade to $1.23.
KGL Price at posting:
$1.20 Sentiment: LT Buy Disclosure: Held
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