NR_Obotan_Feasibility_Study – Final 120828 (.pdf Acrobat Reader)
Obotan Gold Project Feasibility Study
Demonstrates a Robust, Viable Project, Poised for Development
Development of 220,000oz pa West African gold mine on track to commence in H1 2014, marking the first step in the creation of a substantial new West African gold producer
- Independent NI 43-101 compliant Feasibility Study confirms a financially and technically robust mining operation at Obotan, with key outcomes including:
– Pre-Tax NPV of US$614M and Post-tax NPV of US$387M, assuming a US$1,300/oz gold price, 5% discount rate and contract mining scenario (consistent with January 2012 Pre-feasibility Study)
- Pre-tax IRR of 35% and post-tax IRR of 28%
- Capital payback period of 2.9 years
– At current prices of $1600/ounce,
- Pre-tax NPV rises to US$1.07B and post-tax NPV to US$686M
- Pre-tax IRR of 54% and post-tax IRR of 43%
- Capital payback period of 2.0 years
– Average production of 221,500oz Au pa over the first five years
– Total production of 2.26 million recovered oz Au over the 11.5 year mine life
– Life-of-mine Project Revenue of US$2.9 billion
– Estimated average life-of-mine cash operating costs of US$626/oz
– Increased Proven and Probable Ore Reserves of 34.2Mt at 2.21g/t for 2.43Moz of gold across four deposits. This is arise of 170,000oz from the January 2012 Pre-feasibility Study.
– Capital cost estimate of US$296.6M including a pre-strip mining cost of US$82.2M
- Feasibility Study completed with a high level of cost estimates based on firm tenders from suppliers, and quotes from five mining contractors.
- Final Investment Decision (FID) on track for Q4 2012, with interim Board approval to expedite engineering designs of key long-lead items.
- At the end of July 2012, PMI had US$39m cash.
- Environmental studies, Mining Lease Application and other statutory approvals on track to be finalized during Q4 2012.
- A select group of leading international banks have provided detailed indicative offers to deliver debt financing facilities for the development of the Obotan Project.
- PMI continues to focus exploration on tenements close to the Obotan Project, and the Kubi and Asanko exploration projects which offer potential to become future production centres.
- Together with Obotan, these centres support the Company’s medium-term objective of becoming a mid-tier West African gold producer.
PMI Gold Corporation(TSX-V: PMV, ASX: PVM – “PMI”or“the Company”) is pleased to report positive results from the independent NI 43-101 Feasibility Study on its flagship 100%-owned Obotan Gold Project in Ghana, through its wholly-owned subsidiary Adansi Gold Company Ghana Limited (“Adansi”). The Feasibility Study has outlined a strong and viable gold project based on a gold price of $1300/ounce that will form the cornerstone of PMI’s emerging West African gold production strategy.
The strong economics of the Obotan Project provide a solid investment case with the commencement of construction targeted duringQ1 of 2013 to achieve first gold production from Obotan in 2014, conditional on obtaining all statutory approvals, Board Approval, and the finalization of financing arrangements.
The Feasibility Study commenced in the January 2012 Quarter and was completed by GR Engineering Services Limited (“GRES”) with support and input from a range of internationally renowned consultancy groups including SRK, Orelogy, Knight Piesold and AERC. Cost estimates have been based on quotes from five mining contractors and firm tenders received from suppliers.
Further details of the Feasibility Study include:
- Increased Proven and Probable Reserves of 34.2Mt at 2.21g/t for 2.43Moz of contained gold has been calculated. This represents a 13% increase in tonnage and 8% increase in contained gold compared with the maiden Proven and Probable Ore Reserve in the January 2012 Pre-feasibility Study (30.3Mt at 2.32g/t for 2.26Moz of gold). A 4.7% reduction in grade has been offset by the conversion of additional Inferred Resources to Indicated Resources then into reserves as a result of successful in-fill drilling programs. There are additional Inferred Resources within the open pit which have not been included in the Ore Reserve but which may be converted in future.
- Life-of-mine production of 2.26M oz of recovered gold over an initial 11.5 year production life (exclusive of 1 year pre-strip operations).The waste-to-ore ratio has been reduced from 7.6 in the Pre-feasibility Study to 6.4 (including the pre-strip).Post pre-strip, the life of mine strip ration drops to 5.6:1.
- Life-of-mine average cash operating costs are estimated at US$626/oz (excluding royalties, refining costs). Total cash operating costs are estimated at US$722/ozincluding royalties and refining costs, positioning the Obotan Project at the lower end of the global cash cost curve.
Commenting on the Feasibility Study results, PMI’s Managing Director and CEO, Collin Ellison, said:
“We are very pleased with the results of the Obotan Feasibility Study, which clearly demonstrates the potential to develop a robust, long-term mining operation capable of delivering strong investment returns that will form the cornerstone of our emerging gold business in West Africa.
“We are currently continuing detailed design and engineering work, as well as assessing options to optimize capital and operating costs while we continue discussions with potential project financiers. This puts us firmly on track to make a development decision during the fourth Quarter of 2012, paving the way for us to secure project finance and commence development early next year.”
“A select group ofleading international banks have provided detailed indicative offers to deliver debt financing facilities and we are currently assessing these offers in conjunction with our advisors, Optimum Capital Pty Ltd, in order to determine the best combination of debt and equity funding to underpin project development. The Company has also made excellent progress with the statutory approvals process and is well placed to finalize its environmental approvals and secure the grant of a Mining Lease during the fourth Quarter of 2012.
“PMI isassembling a highly skilled technical team with extensive experience in developing gold projects in West Africa. This team will realize the Company’s broader corporate objective of creating a substantial mid-tier gold producer in West Africa.
“The key elements of this strategy are already well advanced with over 85,000m of exploration drilling completed, focused on identifying potential additional oxide resources within economic trucking distance of the Obotan treatment plant, as well as progressing the Kubi Project as a potential second standalone operational centre and exploring the exciting Asanko Project, which covers a significant portion of the highly prospective Asankrangwa Gold Belt.
“These projects will deliver the second and third growth horizons for PMI Gold, building on the strong foundations established at Obotan.”
NR_Obotan_Feasibility_Study – Final 120828 (.pdf Acrobat Reader)