Chaarat Gold Holdings Ltd (LON:CGH) remains ‘confident’ exploration will add significantly to the mine life at Tulkubash in the Kyrgyz Republic.
Martin Andersson, chairman, said: “We firmly believe that the intensive exploration that is planned for the 2018 and 2019 field seasons will add significantly to the Tulkubash mine life ahead of the first gold pour in 2020. “
WATCH: Chaarat Gold confident its mines will operate for a very long time
He added: “Our objective during the two upcoming drill seasons is to add at least 100% to 150% to the existing Tulkubash resources, which we consider a conservative objective.
“This would be expected to significantly enhance mine life and therefore the project economics.”
The Aim-listed firm today published a feasibility study for Tulkubash.
This indicated an initial life of 3.75 years based on mining a 16mln tonne reserve at an average grade of 0.91g/t gold containing 470,000 ounces of gold with 76.5% recovery.
Upfront costs were US$132mln, repayable in 3.2 years and assuming a gold price of US$1,300 and 5% discount the net present value is US$12.1mln.
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All-in sustaining costs are US$831 per ounce, including all taxes.
The company said the mine generates positive free cash flow of approximately US$59mln per annum at steady state production.
Production is planned to start in 2020 and continues for 3.75 years to the end of 2023 for 360,000 ounces.
Subject to financing, construction will begin in third quarter 2018 and continue for 21 months.
Chaarat shares are suspended from trading on London’s AIM market following a proposal last week to acquire the Kumtor mine, one of the largest gold mines in Central Asia, from Centerra Gold.
It would be part of a three-way deal between Chaarat, Centerra and Kyrgyz state consortium, Kyrgyzaltyn OJSC.
Subsequently, Chaarat will own Kumtor's common equity and be responsible for the management and operation of the mine, while Kyrgyzaltyn will own Kumtor's preferred equity and be entitled to 50% of the mine’s economic benefit.
Kumtor has been in continuous, profitable production for 21 years. It has more than 4mln ounces of open-pit mining reserves and produced 500,000 ounces of gold in 2017, generating US$188mln of free cash flow.