Kingston Resources’ brownfield project places it ahead of the game for PNG gold

Kingston Resources ASX KSN brownfield project PNG gold Papua New Guinea
Kingston Resources’ Misima gold project has been described as a long-life project with a head start and strong exploration upside.

Kingston Resources’ (ASX: KSN) efforts to bring a historical Papua New Guinean gold mine back to life could put it on the path to becoming a substantial new gold producer in the Asia Pacific.

In March, the company moved to 100% ownership of the Misima gold project after acquiring the remaining 19% minority stake from Japan’s Pan Pacific Copper for $2 million.

A recent research report by MST Access has described Misima as “the key to Kingston’s success” due to being a “long-life project with a head start and strong exploration upside”.

Underpinned by a skilled and experienced management team with a proven track record of developing and operating gold mines, Kingston is poised to benefit from the brownfield status of the project, which should cut construction time down by at least a year.

Reviving Misima gold production

Regarded as its flagship project, Misima is located on the island of the same name that lies about 625km east of Port Moresby in the Solomon Sea.

The small island has a long mining history with Misima operating from the late 1980s to 2004, only ceasing due to a sustained period of low gold prices.

During its 15 years of operation, the former owner Placer Dome producer 3.7 million ounces of gold.

Kingston released a pre-feasibility study for the Misima gold project last November that highlighted the potential to develop a large-scale, long-life, low-cost operation with the capacity to produce 130,000oz gold per annum over a forecast 17-year mine life with a forecast life of mine all-in sustaining cost of $1,159/oz.

The open pit mine is planned to produce gold, with silver as a by-product, from two primary pits, Ewatinona and Umuna.

Kingston also reported a maiden JORC probable ore reserve of 48.3 million tonnes at 0.9 grams per tonne of gold for 1.35Moz, along with a mineral resource estimate of 144Mt at 0.78g/t for 3.6Moz gold.

Brownfield redevelopment

Kingston is expected to benefit from reduced construction time and capital costs thanks to Misima’s existing infrastructure which includes ports, airstrip, power and original development sites such as the pit, plant and camp.

The company has estimated a construction timetable, upon receiving approval and funding, of approximately one year. This is compared to greenfield projects which have typically taken at least two year to construct in the region.

Kingston’s forecast pre-production capital expenditure for the project is $283 million with a sustaining capital cost of $135 million. MST’s report regarded this as a “relatively low capital cost for a project of this scale (5.5Mtpa plant)” and a credit to the presence of existing infrastructure.

In addition, the 15 years of historical production has provided data on ore handling, plant operation, and geotechnical and metallurgical properties that markedly reduce technical risk and along with a “substantial” silver resource by-product credit, reduce operating costs.

“In particular, the existence of the silver resource allows a cost benefit of around $100/oz to flow through to operating costs. This assumes a 35% recovery of silver,” MST stated.

“There is potential upside to this recovery rate given improved processes and technology. Silver credits may well be higher and operating costs lower as a result.”

The Misima gold project also has substantial exploration potential with the current resource being open at depth and a high probability of increasing, according to MST’s report.

Exploration upside and the forward work plan

Kingston believes five other outstanding exploration options are presented within the Misima gold project including 4km of untested strike at Misima North.

The exploration focus is on near-surface, easily mineable gold mineralisation.

Recent resource infill drilling at Kulumalia, at the southern end of the main Umuna orebody and outside the current reserve, returned broad intersections of gold and silver including 20.7m at 2.52g/t gold and 86.1g/t silver from 99.3m.

Further exploration is planned for the second quarter of 2021 with a resource and reserve update (including stockpiles) due in the third quarter.

Drilling is planned to continue throughout the 2021 calendar year with a definitive feasibility study due for completion in the first quarter of 2022.

Kingston is aiming to complete funding and receive environmental approval for the project at the end of 2022 with granting of the mining licence and construction slated to start in 2023.

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