Name of the Project
Leonora gold project (LGP).

Location
The project is located in the North-Eastern goldfields of Western Australia.

Client
Kin Mining.

Project Description
A definitive feasibility study (DFS) has confirmed that the LGP is technically sound and highly profitable.

The LGP boasts indicated and inferred resources of 22.3-million tonnes grading 1.4 g/t gold for 1.02-million ounces of contained gold, and a maiden ore reserve of 7.9-million tonnes grading 1.5 g/t for 373 000 oz.

Development is based on three openpit mining centres:
• Cardinia (mainly oxide and transitional ores), which comprises the Bruno-Lewis Link, Lewis, Kyte, Helens and Rangoon deposits;
• the Mertondale area, which comprises the Mertons Reward (transitional and fresh ores), Mertondale 3-4 (oxide, transitional and fresh ores) and Tonto (transitional ore); and
• the Raeside deposits of Michelangelo and Leonardo (transitional and fresh ores).

These deposits will supply a 1.5-million-tonne-a-year conventional carbon-in-leach (CIL) processing plant, centrally located at Cardinia.

Kin envisages that all mining will be undertaken by owner-miner operators using equipment supplied and maintained by a contract mining equipment supplier. 

All drill, blast and grade-control activities will be undertaken by contractors. Kin will provide all technical and managerial direction.

The mining strategy is focused on initially delivering oxide and transitional ore sourced primarily from the Cardinia deposits.

Mining operations will include the Mertondale pits in Year 3 and Raeside material in Year 4.

The DFS incorporates the refurbishment and upgrade of the 800 000 t/y Lawlers plant, acquired from Gold Fields this year, to 1.5-million tonnes a year through the installation of a refurbished 2.5 MW ball mill and six new 1 500 m3 CIL tanks. 

The proposed plant incorporates a two-stage crushing circuit that feeds the ball mill, with gold extracted using gravity and CIL processes.

The DFS has determined that the LGP can produce an initial 61000 oz in its first full year of production, reaching maximum production of 65 000 oz in Year 7.

Potential Job Creation
The mine is expected to have a permanent workforce of about 64 people.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at an 8% discount rate, of A$107.4-million and an internal rate of return of 77%, with a preproduction payback of 11 months.

Value
The preproduction capital cost is A$35.4-million, which includes 18% in contingencies.

Duration
Plant commissioning and first gold are targeted for the second half of 2018.

Latest Developments
Kin Mining will suspend plant construction activities at its Leonora gold project to enable the company to undertake further work after a preliminary review confirmed cost blow-outs at the processing plant.

Kin announced in April the curtailment of construction at the Leonora project in April, 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 DFS would have to be adjusted.

A preliminary report covering the engineering and metallurgical aspects of the Cardinia plant site has confirmed that, while there are no fatal flaws to the Cardinia facility, a number of elements in the processing plant will require additional testwork and design 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.

Based on the information contained in the two reports, the company has decided to suspend plant construction at Leonora until additional testwork, engineering design scheduling and cost estimates can 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 project costs may trigger.

Kin has maintained its confidence in the Leonora project holding significant value, pointing out that the project hosts a resource base of more than one-million ounces of gold and is located within the highly endowed and operationally active Leonora gold region.

The company has indicated that while additional work is being undertaken on the Leonora project, it will continue with its active exploration and drilling programme at the Leonora site.

Key Contracts and Suppliers
Gold production remains on schedule for the second half of 2018.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Kin Mining, tel +61 8 9242 2227 or email info@kinmining.com.au.