Kin Mining NL (ASX:KIN) has engaged Como Engineers to undertake an independent and thorough review of the Leonora Gold Project (LGP) in Western Australia.
The company has tasked the independent consultants to generate new cost and time to complete estimates, along with a rigorous implementation plan for the project.
Increase in pre-production capital cost estimate
This follows a decision by the company’s board to curtail construction pending a full review of the capital cost and schedule for completion.
An increase in the existing pre-production capital cost estimate has necessitated the decision.
Company statement
In a statement, Kin said: “The existing estimate of $35.4 million was detailed in the definitive feasibility study (DFS) on the LGP completed in October 2017.
“Following recent changes to the composition of Kin's board, a review process of key aspects of the LGP was commenced pursuant to which it has become apparent that the DFS estimate of pre-production capital costs will need to be adjusted.
“If the company had continued with development of the LGP 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 LGP.
“The Board wishes to undertake a comprehensive review of the LGP to ensure that, before full project development is resumed, it has a high degree of confidence in key project parameters, cost and time estimates, and a clear and certain funding path in place to complete the LGP.
“The Board considers that this course of action is necessary to ensure that a significant equity capital raising is not conducted at a time when the Board cannot be confident of the projected capital cost and schedule to complete the LGP.”
READ: Kin Mining attracts funding from Sprott on pathway to gold production
The project has a resource base of more than 1 million ounces of gold and the company remains confident that the project holds significant value.
Kin will continue its targeted exploration on the project and surrounding areas.
Existing debt provider for the project, Sprott Resource Lending LLC, has been advised of the board’s decision to curtail work.
The company is in discussions with Sprott to determine the most effective way forward.