Chaarat Gold (LON:CGH) has unveiled a its final draft results of a feasibility study for its gold mine in the Kyrgyz Republic.
The study shows what Chaarat describes as a very low cost of production, of US$635.2 per ounce, and values the project (net present value, NPV) of US$351mln based on a US$1,250 gold price.
Initial capital costs to the start of full production are estimated at US$684mln, though the company said there is potential for this to be considerably lower.
And, furthermore, it says there is significant potential for improved economic returns from optimisation.
Chaarat highlighted that the study is based on an estimated 53mln tonne reserve, grading 2.79 grams per tonne for a total of 4.7mln contained ounces of gold.
Production is forecast at 211,000 ounces per year at full capacity, and the mine is estimated to have an 18 year life.
The study requires approval from the Chinese regulatory authorities, and Chaarat said the timing of this cannot be determined at present.
Chaarat has, however, told investors that it now considers that any further delay in the publication of the full feasibility study is not justified.
“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,” said Dekel Golan, Chaarat chief executive.
“We are very appreciative of the unstinting patience shown by our shareholders.”
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.
Golan highlighted that due to the more conservative nature of the Chinese feasibility study it is expected that there will be further upside to the mine’s actual economics as the project advances.
“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.
Golan added: “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.”