St Augustine Gold & Copper and its joint venture (JV) partner Nationwide Development Corp have received positive results from a preliminary feasibility study (PFS) on the King-king Copper-Gold Project in Pantukan, Compostela Valley, Mindanao.
Results show the planned operation has favourable economic potential - generating a pre-tax net present value of some $2 billion and an estimated pre-tax internal rate of return of 24.8%.
“The results of this advanced study confirm that King-king is an attractive project that will bring significant value to our shareholders, our partner and the Philippines,” says St Augustine’s CEO Andrew J Russell.
NADECOR’s president Conrado T Calalang echoed the sentiment. “We are pleased the millions of dollars and years of intensive technical work that St Augustine has invested in the PFS have paid off and confirmed the potential to generate great value and thousands of jobs for the Philippines.”
The Declaration of Mine Project Feasibility (DMPF) was submitted to the Philippine Government in May 2012. The final feasibility study will incorporate any required amendments to the DMPF once comments are received from the Government’s final review of the document.
The key project indicators, according to company officials, include unleveraged pre-tax net present value (NPV) of $2 billion and an estimated pre-tax internal rate of return (IRR) of 24.8%, using an 8% discount rate, $1250/ounce gold price and $3/pound copper price. Further indicators include ore delivery and processing rates to be designed in daily throughput of 100,000 tonnes split between 40,000 tonnes to an on-off heap leach and 60,000 tonnes to a flotation mill with agitated tails leach.
The daily mining rate will be about 178,000 tonnes for the 22-year mine plan. Production from the heap leach process is expected to start one year prior to commencing mill operations.
Robust project economics are driven in large part by an initial five-year higher grade operation with low strip ratio and tidewater proximity. Average annual production during the first five years of full production (both heap leach and mill in operation) is 270 million pounds of copper, 360,143 ounces of gold and 568,958 silver ounces with an average gold equivalent total cost of $454 per ounce.
In addition, life of mine production stands at 3.16 billion copper pounds, 5.43 million gold ounces and 11.65 million silver ounces. These statistics, say company representatives, include estimated initial capital costs of $2.04 billion including the mine, the mill, on-off leach pad, power plant, port facility and $240 million in contingency costs.
The study further assumes large-scale contract mining will be used over the 22-year mine plan, which reduced project initial capital and increased mine operating cash cost.