Shares in KIN Mining have nearly halved in value today after the company announced it would be reviewing its $35 million Leonora gold project following expected increases in pre-production capital costs.
Perth-based Kin said it would limit construction work at the project, which was targeting production in the second half of the year, until a comprehensive review had been completed.
The company has appointed Como Engineers to undertake the review.
Shares in Kin had fallen 44 per cent to 14 cents each at 130pm AEDT.
Kin said that an internal review of the project had commenced following Mr Harper’s departure.
“If the company had continued with the development of the Leonora project, the potential scope of increase in capital costs would have given rise to the requirement for a significant equity capital raising to fund the increase, along with expected exploration and corporate costs, during the construction period for the project,” Kin said in a statement to the ASX.
The definitive feasibility study released in October forecast a $35.4 million capital cost for the project, with an expected output of 55,000 ounces per annum.
Kin said it remains confident that the Leonora project still holds significant value.
The company also said it would seek to raise $11 million to fund costs for the next six months and was in discussions with Canada-based Sprott Resources Lending, which provided a $US35 million debt package in December.
“The company has only drawn $US5 million under the Sprott facility and has the option to repay this amount at any time, for an accompanying fee,” Kin said.
Kin has so far spent $5.9 million on the project, with a further $3.1 million already committed.