Perth-based explorer Emerald Resources (ASX: EMR) has received approval from the Cambodian Council of Ministers for the execution of a mineral investment agreement for the Okvau gold project approximately 275km north-east of Phnom Penh.
The approval is the first of its kind for a large-scale mining project in the region and provides certainty and stability of the fiscal regime for Okvau’s development and operations.
The MIA will provide an equitable framework to develop the mineral resources within the Okvau deposit, located in the Mondulkiri province of eastern Cambodia.
It represents the final major regulatory milestone for the project and follows the granting of an industrial mining licence, the approval of an environmental contract and licence, and a re-zoning of the mining licence area to ‘sustainable use’ which lawfully permits commercial development under Cambodian law.
The Okvau project has a probable ore reserve estimate of 14.26 million tonnes at 1.98 grams per tonne for 907,000 ounces gold.
Following a review of the key assumptions and inputs for Okvau’s definitive feasibility study, Emerald has updated the project’s net present value to $488 million pre-tax and $345m post-tax, based on a prevailing gold price of $2140 per ounce.
The internal rate of return has been updated to 69% pre-tax and 57% post-tax.
The original feasibility study was based on the development of a 2.0 million tonnes per annum operation over an initial operating mine life of more than seven years, producing an average 106,000 ounces of gold per annum with an average life-of-mine all-in-sustaining-cost of $1078/oz.
The project’s estimated development costs remain at $134m, including a $6.49m allowance for spare parts and first fills and a further $10.3m in establishment and pre-production mining costs.
Managing director Morgan Hart said the new figures are a result of Emerald’s efforts to continuously improve all aspects of Okvau’s economics, currently pinned at 1.14 million ounces at 2.0 grams per tonne gold.
“The improvements underline the high-grade, low cost and compelling development economics of this project with reduced implementation risk and significant exploration upside,” he said.
“With the MIA now approved and visibility on these updated project economics, the board has committed to developing Okvau, subject to finalising funding requirements.”
Mr Hart said it was “reasonable to expect” the increased gold price may result in an increase to ore reserves which may in turn, increase mine life and further enhance Okvau’s financial returns.
At midday, shares in Emerald Resources were trading 2.56% higher at $0.040.