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Kingsgate moves Nueva Esperanza gold-silver project toward feasibility on positive PFS

ASX-listed gold producer KingsgateConsolidated Ltd. has decided to advance its Nueva Esperanza gold-silver project in Chile tothe feasibility and permitting stage after receiving positive economics from a pre-feasibilitystudy.

According to an April 13 statement, the study places the netpresent value of the project at US$168 million and the internal rate of return at25%, based on a US$1,200-per-ounce gold price and a US$19-per-ounce silver price.

Nueva Esperanza is expected to produce an average of 91,000 goldequivalent ounces for 11.6 years at an average all-in cost of US$913 per ounce.

The capital cost is expected to be US$206 million, while operatingcosts are tipped to be 38% lower than previous estimates at US$16 per tonne becauseof substantial savings realized in power costs and consumables.

There is also the potential for further reductions of up to 25%in capital and processing costs from the estimates of an unpublished feasibilitystudy done in 2012, according to Kingsgate.

The mine plan optimization delivers a three-year payback period,with posttax free cash flow estimated at US$190 million.

Meanwhile, reserves have increased to 1.1 million gold equivalentounces at a grade of 2 g/t across three open pits.

The resource at Nueva Esperanza has also been updated, but hasnot materially changed from the resourcereported in July 2015, according to Kingsgate.

The project now hosts 39.4 million tonnes at 0.39 g/t of goldand 66 g/t of silver for 490,000 ounces of gold and 83.4 million ounces of silver,or 1.9 million gold equivalent ounces.

"Following these positive results, we are aiming to completepermitting and a feasibility study in 2017, which will allow us to make an investmentdecision thereafter," CEO Greg Foulis said.