Zara Project Feasibility Study
The key financial outcomes of the Feasibility Study, which was undertaken by Lycopodium Minerals Limited ("Lycopodium") with inputs from prominent industry consultants AMC Consultants Pty Ltd ("AMC") and Knight Piésold Pty Ltd ("KP"), are shown below. All figures are in US dollars except where noted. A summary of the Feasibility Study, as released to ASX, can be accessed by clicking here.
Additional details fo the Feasibility Study can be found in the 43-101 Technical Report by clicking here.
Feasibility Study – Key Financial Outcomes
|
100% Project Financial Outcomes
(Unleveraged)
|
Gold Price
|
|
$900
|
$1200
|
$1500
|
|
Life-of-mine EBITDA
Average annual EBITDA
NVP(5%) after-tax cash flows
IRR after tax
Payback period (years)
|
$381M
$54M
$99M
22%
2.8
|
$589M
$84M
$196M
35%
2.1
|
$797M
$114M
$293M
45%
1.8
|
Feasibility Study Assumptions and Parameters
|
Base Case Assumptions
|
|
Gold price base case
|
US$/oz
|
900
|
|
Foreign exchange rate
|
AUD/US$
|
0.85
|
|
Foreign exchange rate
|
Eritrean Nakfa/US$
|
15.00
|
|
Fuel price
|
$/litre
|
1.00
|
|
Fiscal Parameters
|
|
Corporate tax rate
|
%
|
38
|
|
Royalty*
|
%
|
5.0
|
|
Base Case Mine Parameters
|
|
Ore milled (Mt)
|
Mt
|
4.6
|
|
Waste mined (Mt)
|
Mt
|
48.3
|
|
Strip ratio
|
T:t
|
10.4
|
|
Average gold grade
|
g/t
|
5.10
|
|
Total contained gold
|
oz
|
760,000
|
|
Estimated gold recovery
|
%
|
96.3
|
|
Total recovered gold
|
oz
|
730,780
|
|
Life of Mine
|
Years
|
7
|
|
Average annual gold production
|
oz
|
104,000
|
|
Base Case Cost Parameters
|
|
Pre-production capital
|
$M
|
122
|
|
Sustaining capital and mine closure
|
$M
|
9
|
|
Average total cash costs ($/oz)
|
$/oz
|
338
|
Operating Cost Estimates
Operating cash costs over the life of the project are projected to average $338/oz, with the operating cost components summarised below:
|
|
S/t milled
|
$/t mined
|
$/recoverable oz
|
|
Average mining costs
|
20.46
|
1.92
|
129.80
|
|
Processing cost
|
24.78
|
2.33
|
157.20
|
|
General and administration
|
7.36
|
0.69
|
46.70
|
|
Refining charges
|
0.63
|
0.06
|
4.00
|
|
Operating cash costs (LOM)
|
53.23
|
5.00
|
337.70
|
Capital Costs Estimates
The Feasibility Study is based on capital pricing as of the second quarter of 2010. The level of accuracy of the capital costs estimates is within ±15%.
The pre-production capital costs are estimated at $122 million, including contingency and escalation, but excluding 2010 sunk costs that will be funded from existing cash resources. Sustaining capital expenditures over the operation's mine life is estimated at $9 million, including closure costs of $1.3 million, with the balance met by the salvage value of the plant and equipment.
The cost breakdown for pre-production capital expenditures, assuming an owner operator scenario, is shown below:
|
Estimate + 15%
Description
|
$M
Cost Estimate
|
$M
Contingency
|
$M
Escalation
|
$M
Total Cost
|
|
Mining equipment
|
18.8
|
0.9
|
0.3
|
20.0
|
|
Mine pre-strip
|
11.3
|
0.0
|
0.4
|
11.7
|
|
Process plant
|
18.3
|
2.2
|
1.6
|
22.1
|
|
Reagents and plant services
|
4.9
|
0.6
|
0.4
|
5.9
|
|
Infrastructure
|
22.9
|
3.2
|
2.0
|
28.1
|
|
Construction indirect
|
10.5
|
1.4
|
0.3
|
12.2
|
|
Management costs
|
7.1
|
0.7
|
0.7
|
8.5
|
|
Owners' costs
|
12.1
|
0.4
|
1.0
|
13.5
|
|
Total
|
105.9
|
9.4
|
6.7
|
122.0
|
Technical Information
This information is contained in the Technical Report on the Koka Gold Deposit, Eritrea dated 27 July 2010 and released on 8 October 2010 (the "Technical Report"). The Technical Report was prepared by Dean Carville, Bsc (Geology) (Hons), MAusIMM, MGSA, Principal Geologist at AMC Consultants Pty Ltd; David Lee, BEng (Mining) (Hons), Graduate Diploma of Business, MAusImm, Principal Mining Engineer at AMC Consultants Pty Ltd; and David Gordon, BAppSc, MAusIMM, Principal Process Engineer at Lycopodium Minerals Pty Ltd (the "Authors"). Each of the Authors is an independent "Qualified Person" in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects.