09/05/2018 - 12:05

Kin suspends work at Leonora

09/05/2018 - 12:05

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KIN Mining has suspended construction at its $35 million Leonora gold project after a review by Como Engineers confirmed increases in pre-production capital costs.

Kin's gold project has been put on hold.

KIN Mining has suspended construction at its $35 million Leonora gold project after a review by Como Engineers confirmed increases in pre-production capital costs.

Perth-based Kin began an internal review of the project after managing director Don Harper resigned in February.

Last month, the company flagged potential cost increases and said it would limit construction work at the project until an external review by Como was complete.

In a statement to the ASX today, Kin said the cost revision had been confirmed by a preliminary review.

“The Como report confirmed the board’s expectation that there will be a material increase in the capital costs to deliver the Leonora gold project,” the company said.

“In addition, Kin has received a preliminary report into the LGP from its new chief executive officer Andrew Munckton, which aligns with the findings of Como and highlights other opportunities to reduce risk and optimise the project’s financial returns.

“Based on the information contained in the Como and CEO reports, the board has determined that the best path forward for the Leonora gold project is a suspension of plant construction activities until additional testwork, engineering design scheduling and cost estimates can be completed.”

The report indicated that there were no fatal flaws in regard to the Cardinia plant site.

Kin said it was still planning to raise $11 million to fund costs over the near term.

The company has also requested a waiver from Sprott Private Resource Lending to cover any potential events of default that the suspension of construction may trigger.

Sprott provided a $US35 million debt package in December.

Kin has so far spent $5.9 million on the project, with a further $3.1 million already committed. 

Shares in Kin were down 9.38 per cent at 14.5 cents each at 2pm AEDT.

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