Alara Resources (ASX:AUQ) has reduced the capex estimate on its 2 million tonnes per annum zinc-copper project in Saudi Arabia to US$257 million from US$298 million.
The revised estimate is part of the definitive feasibility study for the Khnaiguiyah project in Saudi Arabia due for completion in first quarter of 2013.
The earlier capex estimates were based on preliminary estimates received on tender documents for the construction of the plant and forward estimates on infrastructure and the mining fleet.
The total cash operating costs for the Project averaged over the Life of Mine (LOM) are expected to be US$41 per tonne of ore, including mining, processing, transport, treatment and refining.
Over the first nine years when all of the ore will be mined out and either processed or stockpiled, the average cost will be US$52 per tonne of ore.
These costs are based upon a 2Mtpa ore throughput.
In the first four years of production, with an average annual production of 90,000 tonnes of zinc metal and 6,250 tonnes of copper metal as concentrate, the cash costs are expected to be US40 cents per pound of payable zinc after copper credits at the current copper price.
Alara is also progressing discussions with a number of project finance providers, in particular from the Saudi Industrial Development Fund, that may advance up to 75% of the total capital required.
Discussions are also underway with potential supplier and offtake partners also has given Alara the confidence on additional levels of non-equity financing from these parties.
This can further reduce equity funding that Alara may require.
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