Kin Mining (ASX:KIN) has tightened the plan for a trial mine at its Leonora gold project in Western Australia, setting up a low-cost starter operation that will increase confidence in an important resource area.
The design of the Lewis trial mining operation on the project’s Bruno-Lewis supergene resource (120,000 ounces of gold) has been refined with a more than 30% reduction in waste, generating a more economically robust mining schedule.
Preliminary site works commenced with the refurbishment of the Cardinia Haul Road have also been completed.
The optimised pit design is viewed as encouraging and has been tailored to lower processing cost afforded by vat leach processing. Revised costs enable a lower cut-off grade to be applied to the ore zone, resulting in more available ore tonnes to be accessed within a smaller pit design.
The trial mine is projected to be a cash positive exercise that will give a greater understanding of the economic viability of the supergene ore within at Leonora’s larger Cardinia resource.
Upcoming operations at Lewis are expected to refine vat leach recovery rates of the supergene ore, all-in sustaining costs of a vat leach operation and detailed specific gravity determinations that can be applied to Cardinia.
It will also provide reconciliation of the Bruno-Lewis resource.
Total Leonora resources have been estimated at 11.8 million tonnes at 1.9g/t gold for 722,300 ounces of gold.
The mining proposal has been approved by the government which has enabled the project to move forward within estimated time frames.
Site works have begun, with the completion the of the haul road within the Cardinia area. Procurement of key infrastructure is under way and a mining engineer and mine geologist have been appointed to manage the project.
It is expected that the supergene ore at the Cardinia Resource to be a low cost operation due to the bulk of the resource being contained between 20-50m below surface. The ore is a free-dig clay that will eliminate drill and blast costs and potentially the need for crushing.
Primed at Leonora
Kin gained extensive historical exploration and mining data with the acquisition of Leonora from the administrator of Navigator Resources in 2014. Historical production was over 316,000 ounces of gold at a high average head grade of 4.92g/t gold. Historical mining was sporadic and limited – there is potential to significantly expand the resource base.
A Pre-feasibility Study completed by Navigator did demonstrate robust project with considerable upside/
With over 70% of the 722,000 ounce total resource classified as Indicated at an acquisition cost of circa $2.60/ounce, the acquisition of Leonora is a game changer.
The acquisition provided an effective low risk pathway to production with the near-term production opportunity at Cardinia - Lewis and a BFS commencing 2016.
Analysis
The Lewis trial mine is an important step in Kin’s transition into a gold producer, and these latest practical developments demonstrate the viability of this emerging business model at Leonora.
The trial mine is expected to better inform the company about the particulars of the supergene ore, enabling it to be incorporated into the larger Cardinia resource.
The potential for high-grade starter pits should help secure project finance and reduce payback period. Strong results from metallurgical test work, include recoveries of over 95%.
Kin is on a fast track to production in a prolific gold mining region, having advanced to its status as an emerging gold producer in less than two years.
With a very tightly held share register (the top 20 hold 60%), Kin is attuned to exploration success; the directors hold 27% of issued capital and are clearly aligned with success of the company.
Not to be forgotten, chairman of Kin is the well versed Terry Grammer, awarded joint ‘Prospector of the Year’ in 2000 for the Jubilee Mines Cosmos Nickel Deposit discovery.
Kin has strong upcoming news flow as the technical team scrutinize the Leonora gold project database, with numerous exploration opportunities within a broader project portfolio. It is also highly leveraged for growth through acquisition and exploration success – all at a market cap. of just $6 million (at $0.10).
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