JOHANNESBURG (miningweekly.com) – The New Luika gold mine, in Tanzania, is set to start its crossover into a underground high-grade mining operation, with smaller-scale lower-grade surface mining of resources fizzling out, as Aim-listed Shanta Gold aimed to start underground production in the second quarter of 2017.
New Luika, which was track to achieve its yearly production guidance of 72 000 oz to 77 000 oz at an all-in sustaining cost (AISC) of $850/oz to 900/oz, was becoming increasingly underground focused, with the new base case mine plan showing the production of 443 000 oz – 133 000 oz openpit and 310 000 oz underground – from 2016 to 2022.
The East Africa-focused gold producer, developer and explorer, which aimed to start portal development in the second quarter of 2016 as its openpits were gradually mined out by March 2018, boasted probable reserves for surface and underground of 2.65-million tonnes at 5.9 g/t gold, delivering 506 000 oz, with a life-of-mine (LoM) cash cost of $535/oz and LoM AISC of $695/oz.
The total resources currently outside of the plan were estimated at around 6.64-million tonnes at 2.41 g/t producing 514 000 oz.
The company said the underground feasibility study increased underground reserves by 31 000 oz to 329 000 oz extracted from 1.57-million tonnes over six years at a grade of 6.5 g/t using a $1 200/oz gold price.
The underground operation’s LoM average cash cost and AISC were forecast at $499/oz and $640/oz respectively; with a net present value (NPV) of 8% and a pretax internal rate of return (IRR) of 56%.
The preproduction capital cost, including contingency, would reach $38.4-million, with total capital expenditure of $61.2-million expected over the six-year LoM of the underground operations.
A separate tailings recovery project, to be commissioned in 2016, would produce another 19 000 oz, delivering a further NPV of $5.1-million at an 8% discount rate and a pretax IRR of 49%.
“The mine plan clearly demonstrates a significant upward revision of the reserve figures and the positive economics of the underground feasibility study it includes. The economics of the updated mine plan remain robust despite the recent gold price environment and demonstrate the quality of the geological endowment at New Luika,” Shanta concluded.