Kingsgate Consolidated Limited (ASX:KCN) Ore Reserves Increase 41% At Chatree Gold Mine, Thailand
Sydney, July 29, 2010 AEST (ABN Newswire) - Kingsgate Consolidated Limited (
ASX:KCN) (PINK:KSKGF) has substantially increased its interim Mineral Resources and Ore Reserve estimates for 2010 at the Chatree Gold Mine in central Thailand.
Interim Ore Reserves increased to 1.9 million ounces of gold in 61.7 million tonnes of ore at a grade of 1.0 gram/tonne gold as at the 30th June 2010. This is calculated using a cut-off gold grade of 0.4 grams per tonne ("g/t") and a gold price assumption of US$950 per ounce*. This represents a 41% increase in Ore Reserves (~610,000 ounces), after mining depletion over the past year, replacing the ounces of gold mined at more than four times the current annual mining rate. Contained within the Ore Reserve estimate is 19 million ounces of silver at a grade of 9.4 g/t silver.
Interim Mineral Resources have been determined at two different cut-off gold grades.
To compare the Resource and Reserve Statement, a Resource Statement was generated using a 0.4 g/t cut-off gold grade. Additionally, Resources were calculated using a 0.3 g/t cut-off gold grade as this is being adopted for long-term mine planning at Chatree and Chatree North. At current gold prices, the cut-off gold grade at Chatree would be approximately 0.3 g/t gold, potentially reducing operating costs significantly by allowing bulk mining methods to be used.
Interim Mineral Resources, after mining depletion, using a 0.4 g/t cut-off gold grade, are 3.7 million ounces of gold in 124 million tonnes of ore at an average grade of 0.9 g/t gold as at June 2010. Within these Resources, 84% is contained in the higher confidence Measured and Indicated categories which substantiate the robustness of the resource and ore reserve models. Contained within the Mineral Resource estimate is 30 million ounces of silver at a grade of 7.3 g/t silver.
Mineral Resources, using a 0.3 g/t cut-off gold grade, are 4.3 million ounces of gold in 174 million tonnes of ore at an average grade of 0.8 g/t gold as at June 2010.
Contained within the Mineral Resource estimate is 37 million ounces of silver at a grade of 6.6 g/t silver.
Further drilling is required over much of the mining leases as most of the modelled open pits are limited by the current extent of the drilling data.
* The gold price assumption used is an approximation of the three year rolling average gold price so as to comply with U.S. Securities Exchange Commission (SEC) guidelines Resource Definition drilling continued in Chatree throughout the year including in the original Chatree Mining Leases where higher gold prices have upgraded the viability of these previously mined deposits. Most of the ore was previously extracted from the original Chatree Mining Leases when the gold price ranged between US$350-600 per ounce.
Ongoing drilling in Chatree North continues to return positive results in the A and Q Pits where good potential remains to expand the current open pit design. This potential together with targets for future underground operations, demonstrates that the current mineral resources and ore reserves are still at interim stages. It is felt that it will take several years of resource definition drilling to more fully understand both the open pit and underground potential of the resources at Chatree.
During the year to 30 June 2010, Resource Definition drilling at Chatree totalled 57,016 metres of Reverse Circulation drilling and 10,805 metres of Diamond drilling.
These data were incorporated into the extensive geological database for the Chatree and Chatree North areas and included updated geological and geophysical interpretations compiled by the Thai based technical teams. Sample preparation and assaying was undertaken using standard methods at the Chatree mine laboratory, which has been certified under ISO 17024 for Gold and Silver bullion and geochemical assaying.
Drilling is in progress to assess the open pit potential of the Q Pits, including a new mineralised trend to the east of the known Q Pit areas. Deeper drilling is also in progress in A Pit where the pit optimises close to the limit of the data. This long-term drilling program to test the deep, high-grade feeder zones has potential to further deepen the open pit. The underground mining potential at Chatree remains to be fully tested.
Chatree and Chatree North Deposit Growth Potential Significant potential exists for the open pits to be substantially larger than the stated Ore Reserves at current gold prices, with minimum impact on the gold grade. This view is based on open pit optimisations using a modelling program called Whittle Four-X.
To better understand the potential of the Chatree Gold Mine, long-term mine planning adopts a base cut-off gold grade of 0.3 g/t. Various pit optimisation studies using the Whittle Four-X program have been completed utilising different gold price scenarios with their related gold cut-off grades. The Whittle Four-X program is extensively used in the mining industry in order to determine optimum "pit shells". For a given block model, slope data, costs, and metallurgical recoveries, Whittle Four-X calculates a series of incremental pit shells in which each shell is an optimum for a slightly higher metal price factor. Final ore reserves may vary from optimised figures by approximately +/- 15%.
For this optimisation study, the block model only used Measured and Indicated categories from the resource block model and scenario analyses were used at Chatree to determine the impact of higher gold prices on pit optimisations. This analysis did not consider the impact of silver on the outcomes. Results are summarised in the table below (see link at the bottom of the release).
This table demonstrates that pit optimisations at Chatree are sensitive to gold price, with excellent potential to substantially increase ore reserves at higher gold prices.
For example, at US$1250/ounce gold, the corresponding Whittle ore reserves are 100 million tonnes for 2.73 million ounces of gold at a 0.3 g/t cut-off grade.
While the current ore reserves adopt a gold price assumption of US$950/ounce, the substantial increase in tonnes, at modest gold price increments, shown in the above table, demonstrate the robust future of the processing plant expansion currently underway from 2.3 to 5.0 million tonnes of ore per annum at Chatree.
For the complete Kingsgate announcement including figures and tables, please view the following link:
http://www.abnnewswire.net/media/en/docs/63421-ASX-KCN-499284.pdf
About Kingsgate Consolidated Limited
Kingsgate Consolidated Limited (ASX:KCN) (OTCMKTS:KSKGF) is an experienced pacific rim gold producer and highly successful ASX listed gold company with significant expertise in gold exploration, development and mining.
Kingsgate owns and operates the Chatree Gold Mine in central Thailand and the Nueva Esperanza Development Project, located in the highly endowed Maricunga gold and silver belt of the Atacama Region of northern Chile.
The Chatree Gold Mine is a world class gold producing asset, with a proven operating history, with 1.8 million ounces of gold and 10 million ounces of silver produced between 2001-2016.
Chatree is a large scale, low-cost, open pit operation with a combined +5 Mtpa processing capacity across two plants, with existing Life of Mine supporting a ~9 year mine life based on 1.3m oz gold reserve.
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