PERTH (miningweekly.com) – ASX-listed Kin Mining will suspend plant construction activities at its Leonora gold project, in Western Australia, to allow the company to undertake further work after a preliminary review confirmed cost blow-outs at the processing plant.
Kin in April announced the curtailment of construction at the Leonora project, warning shareholders of an expected increase in the existing preproduction capital cost estimate of A$35.4-million, after a review found that the capital cost estimate in the 2017 definitive feasibility study would have to be adjusted.
The miner told shareholders on Wednesday that a preliminary report covering the engineering and metallurgical aspects of the Cardinia plant site had confirmed that while there were no fatal flaws to the Cardinia facility, the report had identified a number of elements in the processing plant that would require additional testwork and design in order to optimise project returns.
In addition, Kin’s new CEO, Andrew Munckton, has also submitted a preliminary report that aligns with the findings made by engineering firm Como Engineers, with Munckton’s report also highlighting other opportunities to reduce risks and optimise the project’s financial return.
Kin said on Wednesday that based on the information contained in the two reports, the company has determined to suspend plant construction at Leonora until additional testwork, engineering design scheduling and cost estimates could be completed.
The company has held discussions with its financier Sprott Private Resource Lending and has requested a waiver to cover any potential events of default that the suspension of construction activities, and a revision to the project cost may trigger.
Kin again maintained its confidence that the Leonora project holds significant value, pointing out that the project hosted a resource base of over one-million ounces of gold and is located within the highly endowed and operationally active Leonora gold region.
Once operational, the project will produce 372 000 oz of gold in its seven-year operating life, averaging 55 000 oz/y.
While additional work is being undertaken on the Leonora project, Kin will continue with its active exploration and drilling programme at the Leonora site, the company said.