JOHANNESBURG (miningweekly.com) – Australian junior Carbine Resources said on Thursday that it would hold discussions with key stakeholders in a final attempt to improve agreement terms and operating conditions for the Mount Morgan gold project, after an economic review determined that the Queensland-based project would not generate adequate returns to justify development.

This comes as Carbine had to revise its forecast all-in sustaining cost (AISC) for the project to A$862/oz, from A$549/oz contained in the December 2016 feasibility study estimate, owing to higher cyanide consumption and lower by-product credits.

The revised AISC, in part, stemmed from recently finalised demonstration plant testwork, which identified key technical outcomes following the completion of process design criteria and metallurgical mass balances. Contrary to earlier studies, while the processing plant would recover gold, copper and pyrite, the company was unable to manufacture copper sulphate at the required market specification and instead would produce cemented copper concentrate and copper cathode.

The revised AISC, combined with a relatively high preproduction capital cost of A$87-million, meant that Mount Morgan would not generate adequate shareholder returns, Carbine reported.

“It is now abundantly clear that for Mount Morgan to be bankable, all stakeholders will need to make significant amendments to their respective agreements with the company and the project.

“In particular, the board believes that to secure project funding, we need to renegotiate the terms of the agreements with Norton and Raging Bull in respect of Carbine’s ownership and title to the Mount Morgan project. The company also requires adequate ongoing support from the Queensland government, including a reduction in royalties, due to the project being an environmental cleanup project rather than a new mine development. Consideration also needs to be given in this regard to the timing associated with ongoing regulatory approvals,” MD Tony James said.

Based on a 1.1-million-tonne throughput rate, the project is expected to have a nine-and-a-half-year mine life, producing 30 000 oz/y of gold and 3 800 t/y of copper sulphate.

The share price of Carbine crashed on Thursday, closing 56% lower at 3.5c a share.