Kingston Resources Ltd (ASX:KSN) is a step closer to production at the Misima Gold Project in Papua New Guinea after completing a definitive feasibility study (DFS) that confirms the “compelling economics” of the venture, including a total life-of-mine (LOM) revenue of A$6.1 billion.
The DFS outlines the potential for a large-scale, long-life, low-cost operation, with a 1.73-million-ounce reserve, $956 million net present value (NPV7) and forecast gold production of 2.4 million ounces of gold and 5.6 million ounces of silver over 20 years at forecast LOM all-in sustaining costs (AISC) of A$1,217 per ounce of gold.
Leading independent consultants have been engaged on all key aspects of the project and the metrics set out by the DFS were consistent with the company’s pre-feasibility study (PFS), confirming the technically robust, low-risk nature of the project.
Standalone mining and processing operation
Kingston plans to leverage the strong production history at Misima to construct a 6.1-million-tonnes-per-annum carbon-in-leach (CIL) treatment facility and modern infrastructure on the footprint of the historical mine.
This will establish a new standalone, long-life gold mining and processing operation underpinned by two major ore sources – a cut-back of the existing Umuna open pit and an expansion of the existing small pit at Ewatinona in the Quartz Mountain area.
The extensive mining and processing history, advantageous metallurgy and simplicity of the process flowsheet all give Kingston a high degree of confidence in the technical and commercial viability of the project.
Reserve upgrade
Kingston also reports an increase in the Misima Gold Project JORC probable ore reserve to 76 million tonnes at 0.79 g/t for 1.73 million ounces, an increase of 28% above the previous reserve.
“I am extremely pleased to be reporting such fantastic results from our definitive feasibility study," Kingston Resources managing director Andrew Corbett said.
"Delivering such a high-quality study alongside a 28% increase in reserve is a decisive moment for the Misima Gold Project, Kingston shareholders and all stakeholders, in particular the Misima community who have strongly supported our progress.”
“Foundations established”
“The Kingston study and geological teams have done an outstanding job to complete such a comprehensive work program in a challenging operational environment. The foundations for a return to gold production at Misima are now firmly established and we look forward to continuing to advance Misima towards first production," he said.
“The DFS confirms a robust, large-scale, long-life, low-cost operation delivering total production of 2.4 million ounces at an extremely attractive average all-in sustaining cost of A$1,217 per ounce.
“While there have been significant and broad-based impacts of cost inflation, the project’s economic parameters are compelling, with pre-tax free cash flow of A$2.7 billion, a pre-tax NPV of A$956 million and an IRR of 22%.
“These are outstanding results that highlight Misima as one of the best undeveloped projects in the Asia-Pacific region.
Next steps
“We now look forward to the next stage of advancing Misima. Discussions have commenced in relation to considering the strategic options for developing the project that will demonstrably enhance shareholder returns.
“In the short term, we anticipate concluding the Environmental and Social Impact Assessment (ESIA), with our mining lease and environmental approval applications to be lodged shortly thereafter.”
There will be a number of continuing work programs while the application process is underway.
In the meantime, Kingston has begun consideration of strategic alternatives to help accelerate the development of the project, including an assessment of a range of financing and ownership options.
Kingston has also begun to engage financial advisory groups to assist with advancing these funding and strategic options with appointment of a formal advisor anticipated in the near term.