Manas Resources (ASX:MSR) is an Australian-based company with a Mineral Resource base of 1,184,000 ounces of gold at its 100% owned projects on the Tien Shan gold belt in the south west of the Kyrgyz Republic.
Earlier in the year Manas received full support from the Kyrgyz Republic Prime Minister at that time, Jantoro Satybaldiev, and local officials for the project's development.
It has completed a Bankable Feasibility Study, and a mining and development licence has been issued for the flagship technically low-risk and high-margin Shambesai Gold Project.
Measured, Indicated and Inferred JORC Resources at Shambesai and Obdilla total 17.3 million tonnes at a grade of 2.2 grams per tonne (at a cut-off of 0.2 grams per tonne).
This includes a Proven and Probable JORC Reserve at Shambesai that hosts a much higher grade of 2.5 million tonnes at 3.4 grams per tonne containing 277,000 ounces of gold.
Successful permitting completed
Manas Resources has completed the major part of permitting its Shambesai Gold Project with approval of the Sanitary Protection Zone (SPZ or buffer zone).
The SPZ is the final part of the Kyrgyz Republic Environmental and Social Impact Assessment process and allows the completion of final design permitting and community consultation for the project.
A buffer zone is established around all industrial and mining facilities under Kyrgyz environmental legislation where activities are controlled to ensure any potential possible environmental impacts are limited.
In the case of Shambesai it confirms that the project is likely to have minimal to no impact on any current agricultural and residential use, thus reducing the level of compensation required.
Engineering Design for mine plant and open pits to be completed in December quarter
The company continues to work towards obtaining approval of the final design and infrastructure permits required to commence construction.
The first step, the environmental audit of the Process Plant Basic Engineering, was successfully completed, and the technical and safety review is currently underway.
Manas has recently received the Basic Engineering design for the mine infrastructure and the open pits from its Kyrgyz Republic consultant Asia Rudd Project and will submit the final design documentation for approval during the December 2014 Quarter.
Overheads reduced
Cost cutting measures have also been put into place that should see estimated administration and project expenditure drop to $650,000 for the December Quarter.
The company is also assessing the potential for divestment of some noncore assets which could not only provide some revenue but also reduce holding costs
Discussions for project financing - will trigger a major revaluation on potential funding announcement
Three mining finance institutions from Asia and Europe have shown interest in providing single-package financing solutions for the proposed development of the Shambesai gold mine.
Each of the financiers have completed or are near to completing their due diligence assessment of the project and have shown strong interest in participating in the development, either through debt and/or equity.
Final discussions are planned with each of the financiers in coming weeks.
Proposals under discussion include equity/debt finance packages and cornerstone investment into the project company.
Board Appointment
Justin Lewis was appointed as a Non-Executive Director to the Manas Board during the quarter.
He is a director of Halcyon Corporate Pty Ltd, a Melbourne based corporate advisory house focused on working with growing companies, providing a range of financial services, in both the public and private markets.
Capital Raising
Manas completed a private share placement to raise $850,000 through the issue of 28,333,333 shares at an issue price of 3 cents per share.
The Lead Manager to the placement was Halcyon Corporate and the raising was well-supported by current shareholders as well as a number of new investors.
The funds raised will be used for additional working capital while financing discussions are progressed, as well as being applied to the ongoing pre-development cost of the Shambesai Gold Project.
At the end of the September 2014 Quarter, Manas held cash reserves of approximately $1.5 million as well as listed securities of approximately $0.30 million.
Shambesai Project exhibits extremely low OPEX and CAPEX ranked against global peers
Manas has completed a Bankable Feasibility Study for Shambesai that projects potential for all-in cash costs of under US$700, which place it among the lowest global quartile of costs in the gold sector.
Manas is currently updating the Shambesai Bankable Feasibility Study, which has already delivered some impressive metrics such as:
- Net cash flow US$148M after capital, taxes and royalties (excluding financing costs) from the production of 227,000oz of gold over a 4.5 year mine life at US$1,400 gold price;
- Average Life Of Mine cash costs (C1 costs excluding royalty) of US$387/ounce;
- Total Life Of Mine (C3) after capital and tax estimated to be US$676/ounce;
- Capital expenditure to first gold pour of US$41.3M with an expected pay back of 11 months;
- After-Tax Net Present Value (NPV) of US$105M with an Internal Rate of Return of 67% at an 8% discount rate and US$1,400 gold price; and
- Simple, low-cost vat leach and heap leach operation with projected 84.8% overall gold recovery; including +90% gold recovery for oxide material which contributes +90% of the total gold recovered.
The company has a Resource base of 1,184,000 ounces of gold at the Shambesai and Obdilla prospects, which are only seven kilometres apart.
Catalysts that will drive market valuation
Earlier in the year Manas received full support from the Kyrgyz Republic Prime Minister at that time, Jantoro Satybaldiev, and local officials for the project's development.
The Kyrgyz Republic recently enacted extremely pro-mining development law that should give Shembesai a significant advantage in attracting global development funds.
The recent SPZ approval will also play a key role in financing discussions, which are currently at an advanced stage.
Shambesai is among the lowest quartile of costs in the global gold sector with potential for all-in cash costs of under US$700, has an extremely high Internal Rate of Return, and relatively low capital spend up to first production (within nine months of ground breaking).
This makes the project very attractive, even at a time when the spot price of gold is around US$1,166 per ounce.
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