01/08/2008 - 14:51

Integra WA gold project to cost $85m

01/08/2008 - 14:51

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Nedlands-based Integra Mining Ltd will move to feasibility study for its Randalls gold project near Kalgoorlie after an earlier study pegged capital costs at $85 million.

Integra WA gold project to cost $85m

Nedlands-based Integra Mining Ltd will move to feasibility study for its Randalls gold project near Kalgoorlie after an earlier study pegged capital costs at $85 million.

The prefeasibility study, based on an open pit mining method, outlined a cash operating cost estimate of $504 an ounce the Randalls Project, based on production rate of 120,000 ounces of gold each year over a mine life of almost five years.

 

Below is the full announcement:

Emerging gold company, Integra Mining Limited (ASX: IGR - "Integra"), will move immediately to a Feasibility Study on its 100%-owned Randalls Project near Kalgoorlie after delivering a robust Pre-feasibility Study (PFS) on a proposed A$85 million low-cost, open pit mining development underpinned by its flagship Salt Creek gold discovery.

The PFS, which is based on a case open pit mining developed with ore sourced from three open pits - Salt Creek, Maxwells and Cock-eyed Bob - outlined a cash operating cost estimate of A$504 an ounce for the Randalls Project, based on annualised production of 120,000 ounces of gold over a mine life of almost five years, with an estimated capital cost of A$85 million.

Integra said today (Friday) that the decision to proceed with a feasibility study on the Randalls Project represented a major milestone for the Company. "Even with the base case scenario, which assumes an open pit feed grade of 3.4 g/t gold, Integra will be operating one of the highest grade open pit mines in Australia for this size operation," said Integra's Managing Director, Mr Chris Cairns.

"Our drilling campaign over the past twelve months has delivered a steady procession of exceptional results which is a terrific achievement for our exploration team, led by Greg Wilson," Mr Cairns commented.

"We will now progress our Feasibility Study programmes, which we anticipate will be completed towards the end of 2008, and are on track to demonstrate the viability of a standalone central gold processing facility at Salt Creek, with the capacity to underpin a substantial long-term gold business."

Integra is confident that the forecast mining, milling and capital cost estimates outlined in the Randalls PFS are realistic in the current environment and, while some additional cost reductions may be achieved, these potential savings have not been factored into the study - providing scope for additional improvements to the Project economies.

The forecast Project return of A$129 million includes amortisation of all development capital costs over the 4.3 year 'base case' production only. The Pre-feasibility study indicates an Internal Rate of Return of 41% for the Randalls Project and an operating profit of A$216 million, calculated using a gold price of $950/oz.

In addition, the Company is also confident that future increases in Resources will be realised, resulting in an extension to the projected mine life well beyond the 'base case' production scenario.

Integra currently has a number of gold resources which have not been included in the Pre-feasibility Study which provide positive returns from open pit optimisations, including those at the nearby Aldiss and Mt Monger Projects.

While for simplicity, Integra is focused on bringing the three 'base case' gold deposits into Reserves given the very strong returns demonstrated by the Pre-feasibility Study, the other known deposits will be evaluated with regard to possible conversion to Reserve status once the operation is generating cash flow.

"The next few months represent a critical phase for the Randalls Project, as the move into Feasibility should provide the basis for an exciting, long-term development and growth strategy for the Company," Mr Cairns said.

The positive PFS comes on the back of a recent mineral resources upgrade for the Salt Creek gold deposit in the Company's Aldiss-Randalls Project to 4.6 million tonnes at 2.7 g/t gold for 400,000 contained ounces, which has resulted in the re-classification of a significant proportion of the resource to the Indicated Resources category.

The Company has been pursuing an aggressive growth strategy within its consolidated regional tenement package of approximately 2,200 square kilometres at Aldiss-Randalls and owns the New Celebration gold processing facility - recently dismantled and ready for refurbishment - and a modern 140-person mining camp, providing the Company with the 'hard' assets to move towards development.

 

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