Kin Mining PFS demonstrates Leonora to be potential high-margin gold producer

THE BOURSE WHISPERER: Kin Mining (ASX: KIN) released the results of a recently-completed Pre-Feasibility Study (PFS) on the company’s 100 per cent-owned Leonora gold project (LGP) in Western Australia.

Kin Mining said the PFS demonstrated the LGP to have potential to generate strong cash-flows underpinned by low capital and operating costs, robust margins and a short payback period.

In conjunction with independent consultants, Kin has updated costs and produced a new mining and processing strategy based upon the 2009 PFS completed by the project’s previous owner Navigator Resources, to determine the most profitable path to gold production.

The study evaluated a heap leach/ carbon-in-leach (CIL) combination and a 100 per cent CIL processing option.

Following an optimisation process, it was determined the lowest risk pathway to developing the LGP was to adopt the processing route of a new conventional 750,000 tonne per annum CIL processing plant for the first two years, before ramping up in Year 3 to approximately 1.2 million tonnes per annum through a modest mill expansion.

Kin said the PFS concluded the LGP is technically viable and economically robust, with a forecast production profile from open pit sources commencing at the rate of 43,000 ounces of gold per annum, and rising to 52,000 ounces of gold per annum by Year 3.

Life-of-mine all-in sustaining costs (AISC) are forecast to be $1,084 per ounce with capital costs estimated to be approximately $35 million, with a capital payback period of approximately 18 months.

The initial mine life stands at approximately 6.5 years with a Production Target of 6.8 million tonnes at 1.54 grams per tonne gold for 309,000 ounces of recovered bullion.

Kin considers there to be plenty of potential to grow the mineral resource with a corresponding increase in mine life on the back of exploration at and around known deposits and advanced exploration prospects within the project area.

Having completed the PFS, Kin is looking to have a Feasibility Study (FS) on the LGP completed by the middle of 2017 with first gold production targeted for 2018.

“The study shows that the Leonora project will enjoy low up-front costs which will in turn underpin a low-risk, high-margin operation with a short payback period of 18 months,” Kin Mining chief executive Don Harper said in the company’s announcement to the Australian Securities Exchange.

“This strategy will enable us to generate early profits and accelerate production while at the same time seeking to grow mine life through an aggressive exploration program.

“The Leonora project offers a low-risk, low capital pathway to gold production in the heart of one of WA’s richest gold-mining districts.

“The completion of the PFS marks an important milestone for Kin and sets the scene for our imminent transformation into a significant Australian gold development company.”