On 7 February 2012 Kentor Gold released an announcement on the Murchison Gold Project in WA. This is the new working title for both the Burnakura and Gabanintha mines.
The project will commence production in June 2012 and will eventually involve a four stage expansion program.
Stage one will produce 24,000 ounces of gold from a combination of open pit and underground mining at Burnakura over an initial three and a half years. Further drilling is expected to increase production and extend mine life.
The capital costs of this first phase is $14.8 million, with $2 million already spent. I believe this came in substantially higher than where the market expected and is most likely due to the underground mining component that was a recent addition to the study.
The second phase is targeted to commence production during 2013. This will involve the additional of a parallel heap leach operation which will allow for an expansion in production and the ability to process the lower grade ore.
The third phase will be an expansion of the CIP plant from 260,000 to 500,000 tonnes per year. As yet there is no date mentioned for this. I would assume that this could also happen in 2013, depending on the amount of capital available for KGL’s disposal at the time. (keeping in mind that Andash will hopefully be being constructed at this time as well).
The fourth phase will be the floatation of copper-gold ore to produce a copper concentrate. This is where the Gabanintha project comes in.
The major negative of the announcement was the high cash operating costs for $1,223 per ounce. If you take an average AUD gold price of $1,550 this only leaves a margin of $327. At 24,000 ounces this only equates to $7,848,000. Although not a huge sum of money it should go some way in covering administration costs and part of our exploration program.
The next feasibility on stage two is due in April. It is expected that this will reduce operating costs.
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