SRK Consulting China Ltd has completed an NI43-101 Technical Report in support of the Preliminary Economic Assessment for Majestic Gold’s Song Jiagou Gold Project in Shandong Province.
The PEA was prepared as an open pit mining project and SRK was asked to look at five development scenarios:
1 Utilizing only indicated resources and the existing mill capacity (7400 tonnes/day);
2 Utilizing all of the indicated and inferred mineral resources but not relocating the two nearby villages (mill expansion to 10,000 tonnes/day);
2A Utilizing all of the indicated and inferred mineral resources but not relocating the two nearby villages and utilizing the existing mill capacity (7400 tonnes/day);
3 Utilizing all of the indicated and inferred mineral resources and relocating the two nearby villages (mill expansion to 12,000 tonnes/day); and
3A Utilizing all of the indicated and inferred mineral resources, relocating the two nearby villages and using the existing mill capacity (7400 tonnes/day).
The five year trailing average gold price of US$1355 per ounce was used for the PEA.
The pre-tax net present value (NPV) established by the PEA is US$477 million for scenario 1, US$777 million for scenario 2, US$702 million for scenario 2A, US$1.056 billion for scenario 3 and US$782 million for scenario 3A.
SRK received and validated the database provided by Majestic and removed repeated samples. The database used for the resource estimation consists of samples from 77 surface drill holes, 19 underground drill holes, 46 trenches and 85 underground workings. The database contains 20,836 gold samples in total, including 13,316 from drill holes, 3221 from trenches, and 4299 from underground workings. The maximum gold grade is 263.09 grams/tonne and the average grade is 0.54 grams/tonne prior to grade capping.
As of January 31, 2013, at a gold cut-off grade of 0.3 grams/tonne, within the mining licence and exploration permit area, the Song Jiagou Gold Project contains 28.615 million indicated tonnes @ 1.38 grams/tonne gold for 1.269 million ounces, and 35.309 million inferred tonnes @ 1.43 grams/tonne for 1.623 million ounces.
The current mining licence covers 0.3421sqkm and extends to a depth of 250 metres surrounded by an exploration permit covering an area of 3.15sqkm. Majestic intends to apply to expand the size and scope of the mining licence and the SRK PEA report is an important first step in this process.
Song Jiagou Gold is in production with a daily mining capacity of 5000 to 10,000 tonnes. Mining activities have been outsourced to Yantai Dahedong Processing Co, and mining equipment is also being supplied by the contractor.