The turnaround at Kingsrose Mining’s Way Linggo Gold-Silver Project in Sumatra, Indonesia continues to gain pace, with production increasing and strong progress made on several potential growth options. There were 8791 ounces of gold produced in the September quarter, an increase of 74% on the previous quarter.

The company says the increase in production continues to be driven by the Way Linggo open pit mine, which is now consistently producing high-grade, low-cost gold and silver.

Open pit activities have involved a series of staged cutbacks aimed at safely recovering pillars and remnant ore located above the 1 Level of the original Way Linggo underground mine. As a result, Way Linggo is generating strong cashflow, as highlighted by its performance during the September quarter, when it produced 24,224 tonnes at 9.1 g/t gold at a cash cost of just US$311.

In addition, the final pit cutback at Way Linggo has been approved by the Indonesian Mines Department. The application for the Pinjam Paki (borrow and use forestry permit) is expected to be approved in February 2018, which is in line with Kingsrose’s development timetable. Approval of the cutback means Kingsrose will continue to generate solid production and cashflow from this mine.

To ensure Kingsrose capitalises on this opportunity, it is undertaking a study to explore the possibility of further expanding the existing open pit beyond the currently planned cutback to recover the ore body down to the 3 Level.

Meantime, at the nearby Talang Santo underground mine production continues to be adversely impacted by the inflow of groundwater into the mine and poor ground conditions. There has also been a reduction in mineable areas as a result of delays in developing the mine to access the lower levels.

This combination of factors has rendered the mine uneconomic in its current guise and as a result, the company will progressively suspend underground operations from the middle of this month.

Kingsrose is firmly of the view that significant potential remains at Talang Santo and therefore, it has commenced a scoping study to consider options to re-engineer the underground mine. This would involve modern mechanised underground mining methods which would result in far greater rates of production and lower costs.

The company says the initial results of the study are encouraging and it is expected to be completed by the end of October.

In addition, Kingsrose has commenced a study into the suitability of an ore sorter for the Talang Santo mine and test work is under way to establish if the ore body is amenable to this technology. The ore sorter has the potential to significantly increase the already high grades from Talang Santo and reduce dilution from any future mining operations.

In parallel with the scoping study, Kingsrose is completing a feasibility study on an open pit operation at Talang Santo, where, similar to the Way Linggo mine, there is a significant high-grade portion of the resource remaining in the upper levels of the mine. This was unable to be extracted via the current underground mining method.

Kingsrose is working to accelerate the open pit studies for Talang Santo and intends to seek the required regulatory approvals from the Indonesian Mines Department. At this stage, it is anticipated that the relevant open pit approvals will be received during the September 2018 quarter.

Kingsrose CEO Paul Jago said the company was undergoing a substantial transformation aimed at maximising free cashflow and securing a sustainable, long-term future. “With the reconstruction now completed, we have an immense opportunity to capitalise on these high-grade ore bodies. Our focus is on maximising free cashflow by adopting modern mining methods which will improve safety and working conditions, lower costs and enable us to mine as much of the high-grade ore as possible.

“We ultimately aim to establish two production sources using the appropriate combination of open cut and underground methods while pursuing the highly promising exploration potential of the broader Way Linggo project.”

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