Chaarat Gold has revealed the final draft results of a feasibility study for its Chaarat Gold Project in the Kyrgyz Republic. The study shows the project has a low cost of production of US$635.20 per ounce and values it at US$351 million based on a US$1250 gold price.
Initial capital costs to the start of full production are estimated at US$684 million, although the company said there is potential for this to be considerably lower. It also says there is significant potential for improved economic returns from optimisation.
The study is based on an estimated 53 million tonne reserve, grading 2.79 grams/tonne for a total of 4.7 million contained ounces of gold. Annual production is forecast at 211,000 ounces at full capacity, and the mine is estimated to have an 18 year life.
The study requires approval from Chinese regulatory authorities and Chaarat says the timing of this cannot be determined at present.
The company’s CEO Dekel Golan said, “We consider that the outcome of the study is sufficiently certain that there is no merit in further delaying the announcement of the final draft results.”
Chaarat decided to have a Chinese company conduct the feasibility study to Chinese standards because it anticipates that it will source project financing, contractors and equipment from China.
Dekel Golan said that due to the more conservative nature of the Chinese feasibility study it was expected that there would be further upside to the mine’s actual economics as the project advanced.
“The preparation of a feasibility study by a Chinese engineering company is very different from a similar process in the West,” he said. “In the planned economy of the Chinese mining sector the client is not the company but the state, hence studies tend to be overly conservative.
“The board considers that the value of the Chaarat project has been reduced by certain economic assumptions which were based on ‘indices’ rather than actual quotes. There is therefore significant scope for optimisation and improvement of this work,” he added.