Republic Gold completes milestone BFS for Bolivian gold project

Republic Gold (ASX: RAU) has successfully completed the Bankable Feasibility Study (BFS) for its Amayapampa Gold Project in Bolivia and can now, in conjunction with the recently signed Social Licence Agreement, advance negotiations to source the necessary development finance for the project.

The company said the completion of the BFS is one of the most critical milestones achieved by Republic to-date, and represents a major development in Bolivia.

An estimated ore reserve of 19,900,000 tonnes at 1.3 Au g/t for 817,000 contained ounces is the impetus for planned acceleration of the near-mine exploration programme to extend the resource base.

A preliminary Project pre-tax NPV at US$925 per ounce is US$166M, and at US$1,200 per ounce is US$340M. The capital required to commence production is US$136M.

A conservative gold price assumption of US$925 per ounce has been used and the company expects 683,700 ounces to be produced over 7 years.

Republic Gold expects average annual production of 93,700 ounces from 2,737,500 tonnes per annum treatment plant.

There is a high measured & indicated resource to ore reserve conversion of 83.5% and a strong cash operating margin and very robust project. Cash operating costs of US$13.19 per tonne treated have been used, or US$384 per ounce.

There is significant upside on operating margin with average metallurgical recoveries of 83.8%. There is a low cost open pit mining scenario, with low stripping ratio of 3.0 to 1.0 achieved using conservative pit design parameters.

The project has all critical permits and licensing secured including the Amayapampa Social License. The company said it will continue optimising various BFS elements prior to project go-ahead.

John Kelly, managing director, said “Amayapampa is set to become Bolivia’s largest producing gold mine and with a pre-tax net present value estimate of US$340M at current gold prices, the company is exceptionally well positioned to advance discussions on sourcing project financing to bring the mine into production."

“The BFS has also demonstrated that by the decision to increase the Project’s scale, the company can establish a highly competitive cost base, resulting in an eventual +90,000 ounces of average annual production," he added.

Low cash costs coupled with the low stripping ratio of the planned open pit development strongly supports the economics of the Amayapampa project.

"With conservative modelling of inputs into the BFS, such as the gold price assumption, the geological block model, operating cost contingencies and metallurgical recoveries, the company expects that once the plant reaches full production, that there is scope to significantly improve the operating margins outlined in the BFS," said Kelly.

“Once the project reaches production stage, the company will be in a strong cash position that will be inpart used to explore the highly prospective near surrounds to the Project and further afield in Bolivia.”

As part of an Information Memorandum for debt financing to be produced, the company’s debt advisors, CPM Group of New York, will complete a detailed cash flow model. An NPV based upon CPM’s detailed cash flow model will be lower than the BFS numbers. Whilst the BFS was being completed, detailed work on financing the Project continued

CPM Group has significantly advanced the Bolivian bond financing concept and will be in La Paz in the third week of August to participate in a number of meetings with various financial intermediaries in the domestic bond market.

In the same week, the company’ equity advisors, Carling Capital Partners of Sydney, will be in La Paz accompanied by the President & Chief Executive Officer of a mid-sized resources investment banking group from Canada.

As part of the due diligence for the BFS the company commissioned expert advice on the legal proceedings brought against the Project. This advice supports the fact that this litigation has absolutely no merit. The company said its financial advisors "do not believe the vexatious litigation will be an impediment to financing the Project."

With the BFS complete, the Project’s exploration team will now continue their exploration efforts within the existing concessions. As part of the BFS, a US$5.5M 2-phase near-mine exploration has been scoped out.

Geological mapping of the immediate Project area has been updated in the past few months to assist in targeting the exploration effort. A number of priority targets have been developed over the past months.

The targets are:

- Continued exploration on the strike of the orebody to the north at Chusquia where the Company recently reported highly encouraging trenching intercepts 600 metres to the north of the open pit of 5 metres at 1.78 g/t Au and 5 metres at 22.4 g/t Au.
- The high grade gold-antimony vein system that runs along a structure to the west of the open pit and extends to the south of the pit for 2-3 kilometres to the villages of Pasuta Pampa and Chojnuma. An exploration programme on this structure is underway, with the exploration team refurbishing a number of old adits that once accessed these veins.
- Continue the refurbishment and sampling of the Luko Grande tin mine approximately 3 kilometres north of the open pit.
- Continue sampling on the major structure that trends north from the open pit for 3 kilometres until it runs out of the Company’s present concessions. This fault is highly prospective for gold, tin and zinc, with dozens of old workings stretching along this +3 kilometre fault.
- Examine the underground potential of the northerly plunging Amayapampa orebody. Figure 3 shows drillhole RC97AP212 that intersected 18 metres at 8.17 g/t Au approximately 150 metres below the surface.
- Explore to the west of the open pit to find the major western bounding fault predicted from the work done by the Company’s Consulting Structural Geologist, Dr Steve King.