Tianshan Goldfields (ASX: TGF) is focused on developing its 90% interest in the Gold Mountain Project in north western China. China is now the fourth largest gold producer in the world.
The Gold Mountain Project consists of exploration licences covering 632 square kilometres and hosts advanced gold deposits and exploration targets with the potential for both large tonnage disseminated gold deposits and narrower higher grade opportunities. The Company currently has a total Indicated and Inferred Mineral Resource estimated at 95 million tonnes at 0.9g/t Au for 2.8 million ounces of gold (at 0.5g/t Au lower cut-off grade).
Pre-feasibility study thumbs up for Tianshan's Gold Mountain Project in China
Tianshan Goldfields (ASX:TGF) has announced the completion of a positive Pre-feasibility Study (PFS) on its 90%-owned Gold Mountain Gold Project located in Xinjiang Province’s Tulasi Basin in North West China.
The Pre-Feasibility Study (PFS) results indicate that the Gold Mountain Project is suitable for an open pit mine development and heap leach operation with the potential to become Xinjiang’s premier gold mine, producing 65,000 ounces of gold per annum averaged over a 9-year mine life at an average cash operating cost of US$514/ounce. The estimated pre-production capital cost is US$41 million. The PFS financial model was based on a gold price of US$800/ounce.
Based on the PFS results, the Tianshan Board has committed to proceed with the necessary studies to allow the completion of the Chinese Feasibility Study and Chinese Mineral Resource and Development Utilisation Plan (MRDUP) required to submit a Mining Licence Application to appropriate Chinese regulatory bodies in the second half of 2009.
Main points of the study are:
- Open pit optimisation results include 42 million tonnes of ore processed capturing 1.032Moz of resources and 585,120oz of recovered gold.
- Low estimated total Capex of $US41 million for heap leach operation.
- Low Strip ratio of 1.5 to 1 (waste to ore).
- Production rate of 5Mtpa for an average annual production of 65,000 ounces.
- Estimated initial mine life of 9 years.
- Estimated cash operating cost of US$514 per ounce.
- Project pre-tax NPV of US$48 million at 8% discount rate and pre-tax IRR of 25%.
The Company has established an A$5 million budget to underpin these activities during calendar 2009. Given its strong cash position (circa A$12 million), this will ensure that Tianshan is fully funded to achieve these objectives, while maintaining a sufficient cash buffer to complete potential project funding and development arrangements in early 2010.
Process Plant
The Process Plant for the Gold Mountain Project will comprise bulk heap leaching with multi-stage Conventional Cone Crushing utilising Western designed, PRC manufactured machines (P80 -6.3mm), a Valley Leach Facility and a traditional Adsorption Desorption Regeneration (ADR) circuit and gold room.
Infrastructure and Services
The Ili Kazak Autonomous prefecture task force has been established and the inaugural meeting has indicated that financial assistance for infrastructure such as roads, power supply and land acquisition will be available, as the Gold Mountain Project is seen as a significant project for the region.
Mining Licence
On the strength of the PFS results, the Board of Tianshan Goldfields Limited has committed to continue the preparation of the Mineral Resource Development and Utilisation Plan (MRDUP) for the Project. This will include completion of the Chinese Feasibility Study and obtaining the necessary approvals for the granting of the Chinese Mining Licence.
The company has set the following time line for application of the Mining Licence:
• Chinese Feasibility Study 2nd Quarter 2009
• MRDUP 3rd Quarter 2009
• Mining Licence Submission 3rd Quarter 2009
Strategy and Targets Moving Forward
The Company considers that its key focus moving forward is the completion of the MRDUP containing the Chinese Feasibility Study and the submission of a Mining Licence Application in the third Quarter of 2009. Should Tianshan achieve environmental approval via the completion of the MRDUP and receive a subsequent Mining Licence approval, this will add significant value to the Gold Mountain Project.
Subject to achievement of these milestones, the timing of the approvals process and arrangement of suitable project funding arrangements, Tianshan expects to be in a position to potentially commence development of the Gold Mountain Project in 2010.
The Company has a cash position of approximately A$12 million (current market capitalisation of A$23 million). A budget of A$5 million has been set for calendar year 2009 to advance the Gold Mountain Project through to:
a) the completion of the Chinese Feasibility Study and necessary Mining Licence Application requirements;
b) meeting the commitments and a modest exploration programme at the Gold Mountain Project (Xinjiang);
c) exploration drilling at the Qixia Gold Project (Shandong); and
d) funding all corporate and administration costs.
