Chaarat Gold Holdings (LON:CGH) has reworked the economics of its planned mine in the Kyrgyz Republic, resulting in a reduction of capital costs and a significant increase in its worth.
The feasibility study prepared by consultants NERIN Engineering and NFC places a net asset value of US$615mln on the Chaarat project, up from US$351mln.
The new figure assumes a US$1,250 per ounce gold price and an 8% discount rate.
The internal rate of return is put at 25%, while the initial investment required to get the mine up and running is now expected to be US$470mln, compared with US$684mln previously estimated.
The all-in sustaining costs of the Chaarat operation are estimated at US$605 per ounce, which would make the company one of the cheapest gold producers in the world.
The reserve base remains unchanged in the updated feasibility study at 4.7mln ounces of the yellow metal at a grade of just under 2.8 grams per tonne, while the plan is to mine 211,000 ounces a year.
The company said it would now assess methods of improving the amount of gold it recovers from processing the ore from the Chaarat mine.
Chief executive Dekel Golan said the costs were reduced by adapting the design to local conditions and by seeking quotes from Kyrgyz companies.
A reduction to the volume of earthworks undertaken in the revised plan also helped bring down overheads as did the more efficient site layout.
Golan also revealed the interest in Chaarat, “a world class, low cost” asset, “has not disappeared”.
“Your management is reviewing a number of options targeting value generation whilst minimising dilution for our shareholders,” Golan said in a stock exchange statement.
“We hope to deliver news on our progress in the coming months We commend the patience of our shareholders who will appreciate that it is important to take our time to maximise the value of the Chaarat project for their benefit."