JOHANNESBURG (miningweekly.com) – A feasibility study on Aim-listed Chaarat Gold’s Tulkubash oxide gold project, in Kyrgyz Republic, Central Asia, indicated a 3.75 year mine life, with 16-million tonnes of reserves at an average grade of 0.91 g/t gold.
However, ongoing exploration will be carried out in parallel with the project development and Chaarat is confident that future exploration results will add significantly to the initial mine life ahead of first production to enable Tulkubash to become a long-term cash generator to sustain organic growth.
“Average gold production of 95 200 oz/y are expected, with peak production during steady-state operations in excess of 100 000 oz/y,” Chaarat said in a statement.
Annual post-tax free cash flow of $58.6-million during steady-state operational period is forecast at an average cash operating cost of $726/oz and an all-in sustaining cost of $831/oz, including all taxes.
The initial capital expenditure of $132-million should be paid back over 3.2 years.
The reserve also contains 582 000 oz of silver at a grade of 1.13 g/t silver. This material has been identified as being highly amenable to heap leaching containing virtually no organic carbon and total sulphur of less than 0.5%. The mineralisation occurs in a highly fractured, brittle host rock which lends itself to crushing without the generation of excess fines and need for agglomeration.
The reserve and resource for the current mine life is derived from about 2.2 km of a defined 24 km strike length for the Tulkubash trend, with mineralisation remaining open along strike.
Numerous occurrences of outcropping ore-grade gold mineralisation and high-grade gold in soil anomalies have been defined along this trend within the existing Chaarat mining and exploration licences, said Chaarat nonexecutive chairperson Martin Andersson.
“During 2017, a total of 17 240 m of drilling was completed, adding 287 000 oz of gold to measured and indicated resources, over a strike length extension of 1 km, at an average all-in discovery cost of under $20/oz.”
Extensive exploration is planned for this year and 2019, with a total budget for 60 000 m of drilling over the next two drill seasons. The company anticipates an ongoing drill budget of 15 000 m/y to 20 000 m/y after that.
“The company sees the potential to more than double the existing Tulkubash resources prior to the first gold pour in 2020 and believes exploration success will continue to add gold resources for years after that.
The upcoming and ongoing drill programmes will be designed with the intent to maximise the ratio of resources converted to reserves, using an enhanced understanding of the geologic controls on mineralisation and economic constraints on reserve classification as defined by the feasibility study, said Andersson.
The objective during the two upcoming drill seasons is to add at least 100% to 150% to the existing Tulkubash resources, which is considered a conservative objective. This is expected to significantly enhance mine life and, therefore, project economics.
Subject to financing, construction will begin in the third quarter of this year and continue until the end of the first quarter 2020.
Bulk earthworks and pre-stripping activities will predominate through the first winter with most facility construction occurring in 2019. Ore stacking will begin in the fourth quarter of 2019 with first gold forecast for the second quarter of 2020.
Production is planned to start in the second quarter of 2020 and to continue to the end of 2023.
Operations will process 4.93-million tonnes a year of ore once ramp-up is complete in 2020.
The project will produce 360 000 oz of gold and 360 000 oz of silver over the life of mine.
“We are very pleased to have completed this key step in implementing our strategy to make Chaarat Gold the leading gold company in Central Asia. The feasibility study has confirmed our belief that the Tulkubash project has the potential to deliver strong operational cash flow over several years,” Andersson noted.
With ongoing exploration, Tulkubash can help fund Chaarat's organic growth through the development of the 5.4-million-ounce high-grade Kyzyltash resource, he added.
“We are confident that the strong operational cash flow delivered from the Tulkubash feasibility study justifies proceeding with the construction of Tulkubash.”