Kingston Resources Ltd (ASX:KSN) has completed resource definition drilling at the Ewatinona deposit, part of its 2.8 million ounces Misima Gold Project in PNG, paving the way for an updated resource estimate in the June 2020 quarter.
The resource drilling was designed to expand and upgrade the existing 220,000 ounces gold inferred resource at Ewatinona, which represents a key target to deliver near-surface gold mineralisation for a potential starter-pit for the proposed Misima mining operation.
Starter-pit ore offers the opportunity to generate early cash flow for Kingston while it establishes access to the larger-scale 2.6 million ounces Umuna resource.
Conversion to ore reserves
The recent drilling at Ewatinona has delivered encouraging results and has also confirmed the company’s updated structural interpretation, with strong potential to both expand and upgrade the existing resource.
Alongside potential resource expansion, the resource update will be focused on converting the existing inferred resource to the higher-confidence measured and indicated categories, making it available for conversion to ore reserves following the completion of a pre-feasibility study (PFS) for the Misima mining operation.
Kingston aims to commence the Misima PFS shortly after the completion of the resource update and anticipates appointing a study manager in the June quarter.
In light of the current market uncertainty relating to the global spread of the COVID-19 virus, together with logistics constraints imposed by international travel restrictions, as well as the State of Emergency declaration in PNG which has resulted in heavy domestic travel restrictions, Kingston and its drilling contractor have agreed to suspend drilling at Misima from the conclusion of the resource drilling program.
This decision will not impact Kingston’s ability to deliver on its key strategic objectives for 2020, namely, to deliver the Misima resource update, complete a PFS and release an ore reserve estimate by the end of the year.
In addition, given the current market climate, the Kingston board and management have considered it appropriate to adopt a number of cost reduction measures.
- Kingston non-executive directors will be waiving fees for April, May and June;
- Kingston senior management salaries will be reduced by 25%;
- The Misima exploration team will be scaled down, including a reduction in the FIFO and residential workforce; and
- Reductions in Administration staffing levels.
Kingston managing director Andrew Corbett said: “I would like to take this opportunity to thank all our employees, contractors, and stakeholders for their support during this difficult time as we respond to the global COVID-19 pandemic.
“The Misima people have been extremely understanding and supportive following our decision to suspend drilling and we look forward to recommencing exploration work in the near term when conditions allow.”
“Our recent exploration strategy has been an outstanding success, putting us on track to announce an updated resource in the coming months.
“Kingston Resources is very confident in the development pathway we have mapped out for the Misima Gold Project with multiple advanced stage exploration prospects in the pipeline while the future of the project remains securely underpinned by the 2.8Moz Resource already in place.
“We look forward to delivering on a number of important project milestones at Misima over the remainder of 2020, as we move this exciting project towards development.”