Alara Resources (ASX: AUQ) is proving just how inexpensive it is to operate in Saudi Arabia, with the company highlighting the low cost advantages of its 50% owned Khnaiguiyah Zinc-Copper Project at the recent Proactive Investors’ One2One Forum in Perth.
Shanker Madan, managing director, told attendees at the event last Wednesday diesel was low in cost at just US$0.03 per litre.
The presentation on the night can be ACCESSED HERE.
Saudi Arabia’s potential as a favourable mining jurisdiction is slowly starting to be realised with a growing number of mining projects starting to emerge.
Madan said Saudi Arabia is often thought by many to be just oil, but the country has enormous potential for gold and copper.
“There is a gold mine only 15 kilometres away from us. There are five new gold projects being developed with 10 million ounces of JORC Reserves. So these are happening but they are only coming out in the public eye now.”
The Khnaiguiyah Zinc-Copper Project is the second most advanced project in the region with a JORC Resource of 26.4 million tonnes at 3.9% zinc and 0.12% copper along with 7 million tonnes at 0.8% copper.
This Resource could underpin a 1 to 1.5 million tonne per annum throughput zinc and copper mine for at least 10 years.
A Definitive Feasibility Study is on track for completion by July.
Alara plans to commence a 70,000 tonne per annum zinc operation at a time of strongly rising zinc prices above US$2,500 per tonne.
Further exploration upside at Khnaiguiyah is expected from drilling activity that was carried out after the cut-off date for completion of the JORC Resource.
Khnaiguiyah includes four mineralised zones located within 1 or 2 kilometres from a central area that have been discovered and drilled to date. The zones are about 3 kilometres apart from each other.
Metallurgical work has demonstrated high recoveries of 87% for copper and 91.5% for zinc, at concentrate grades of around 30% for copper and 57% for zinc.
The project is strategically located close to roads, power and camp infrastructure.
Alara has three to six drill rigs secured and active on the project, with over 35,000 metres of drilling carried out since February 2011. This is in addition to the 45,000 metres drilled historically.
Could Alara emulate Citadel Resources Group success?
Astute investors will remember Citadel Resources Group, which was an emerging producer in Saudi Arabia with a portfolio of exploration areas, which included the Jabal Sayid copper and gold project.
The plan was to produce around 60,000 tonnes of concentrate annually for a decade. Citadel was the first foreign company granted a Saudi Arabian base metal license, with the milestone achieved in May 2010.
In 2010 Equinox Minerals identified the potential in Citadel and agreed to buy the company in a $1.25 billion bid.
It is then worth a thought on Alara. With the Khnaiguiyah resource potentially underpinning a 1 to 1.5 million tonne per annum throughput zinc and copper mine for at least 10 years, with significant potential for adding resources these type of metrics may well attract investors to Alara in the medium term.
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