A keenly-awaited pre-feasibility study (PFS) shows that Kingston Resources (ASX: KSN) can bring the Misima gold mine back to life, to produce about 130,000 ounces per annum over a 17-year mine life.
The company described the PFS, released today, as showing a project with “compelling” economics, a long life, low capital intensity and “outstanding” growth potential.
The study forecasts gold can be produced at an all-in sustaining cost of A$1,159 per ounce over the life of the mine (compared with a current Australian gold price of around $2,560/oz).
Misima now also has an ore reserve of 1.35 million ounces for a 10-year life on reserve ounces alone.
On top of the maiden reserve, there has been a 12.5% increase in the project’s global mineral resource from 3.2Moz to 3.6Moz.
Capital costs have come in at a low $283 million, which includes a $37 million provision for contingencies. This low capex in part reflects the benefits of operating on a brownfields site with significant infrastructure already in place
Misima is located on the island of the same name that lies in the Solomon Sea, east of the Papua New Guinea mainland and part of the Milne Bay province.
PFS is a ‘significant’ milestone for Kingston shareholders
Gold was first discovered on Misima Island in 1888, a hundred years later under the control of Placer Pacific it came to be regarded as one of the great gold mines of the Asia Pacific,. Last mining took place in 2001 before it was closed in the wake of a then-low gold price.
Kingston managing director Andrew Corbett said he is “extremely excited” by the results of the PFS, the maiden ore reserve and a further increase in the global mineral resource.
“This is a significant milestone for all stakeholders in the Misima gold project and represents a meaningful step towards our goal of becoming a substantial new mid-tier Asia Pacific gold producer,” he added.
Last month, with the lifting of COVID-19 restrictions, Kingston resumed drilling operations at Misima with two diamond rigs.
The 8,000m program will include infill and extensional drilling at the southeast end of the proposed Umuna pit as well as at the company’s 2019 Abi discovery.
The drilling was planned with a view to target resource conversion within the current pit shell as well as to test high-grade near-surface mineralisation.
Leveraging off a strong production history
The company is planning a cut-back of the existing Umuna open pit and an expansion of the existing small pit at Ewatinona in the Quartz Mountain area.
Kingston said the PFS shows significant project upside can be delivered through drilling campaigns now under way.
These will identify additional near-surface ounces for the early production years at Misima.
Kingston plans to leverage off what it terms a “strong production history” with a new carbon-in-leach treatment plant and modern infrastructure on the footprint of the historic mine.
Kingston appoints new chairman
Meanwhile, the former president and chief executive officer of OceanaGold Corporation (ASX: OGC), Mick Wilkes, is set to take over the chairman’s role at Kingston Resources.
He replaces Anthony Wehby, who remains on the board as a non-executive director.
Mr Wilkes has more than 35 years of experience in the mining industry and has specialised in project development, construction and operations.
Over the past 20 years, he has been successful at developing four major gold and copper mines globally.
Mr Corbett said he wanted to acknowledge the “fantastic” efforts of Mr Wehby for leading the company through the early phase of its development path.