PERTH (miningweekly.com) – Gold developer Kin Mining has revealed cost blow-outs of between 30% and 50% at its Leonora gold project, in Western Australia, in the wake of the unauthorized release of a preliminary engineering report on the project, undertaken earlier this year.
Kin in May announced plans to suspend plant construction activities at Leonora, to allow the company to undertake further work after this review confirmed a cost blow-out at the processing plant.
However, at the time the ASX-listed company did not reveal the extent of the cost increases, saying the board at the time did not have sufficient confidence in the accuracy of the capital cost estimate.
Prior to undertaking the preliminary review, Kin undertook an internal revision of the capital cost for the Leonora gold project, which revised the capital cost estimate from the original A$35.4-million estimated in the definitive feasibility study, to A$45-million.
However, the report by Como Engineers found that the internal review underestimated the capital cost increase by between 10% and 20%, finding that the capital cost estimate for Leonora was, in fact, closer to between A$49-million and A$53-million.
Kin told shareholders that the Como Engineers report outlined 11 areas of concern, which needed to be addressed by additional work, and a further six areas of concern that required further work were identified in the metallurgy report.
However, no fatal flaws were identified in either the engineering or metallurgy report, with Kin telling shareholders that it was conducting additional studies and testwork in the areas identified to advance the Leonora project to a lower risk, higher quality investment decision in the second half of 2019.