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Avnel: DFS pegs NPV of US$196M, IRR of 38% for Kalana Main gold project

Avnel Gold MiningLtd. said March 30 that a definitive feasibility study for its gold project insouthwestern Mali indicated an after-tax net present value of US$196 million, usingan 8% discount rate, and an internal rate of return of 38%.

Payback is 1.2 years from the start of commercial production.

The mine plan provides for 18 years of production from the KalanaMain deposit from a single open pit with 12 stages. A total of 228 million tonneswill be mined.

Ore will be delivered from the mine to a processing plant, whichconsists of a conventional two-stage crushing circuit and a single-stage millingcircuit. The processing plant design is based on annual throughput rates of 1.5million tonnes per annum for saprolite and 1.2 Mtpa for saprock and fresh rock material.

Gold is to be extracted by gravity concentration and a carbonin leach plant to produce gold dore via elution, electrowinning and smelting. Goldrecovered from the loaded carbon in an elution and electrowinning circuit will bepoured into dore bars on site.

The initial CapEx to achieve commercial production, slated 25months after the start of construction, is estimated to be US$196.3 million. Revenuegenerated by gold production of 53,000 ounces from processing existing gravity tailingsand ore during mill commissioning is expected to total US$41.2 million and willoffset capital costs.

Sustaining CapEx is US$123.0 million.

Average annual production for the first five years is at 148,000ounces at all-in-sustaining cost of US$595 per ounce.

Over the mine's 18-year life, total production stands at 1.82million ounces with gold recovery of 92.7%, averaging 101,000 ounces per year atall-in sustaining cost of US$784 per ounce.

Kalana Main has a maiden mineral reserve of 21.7 million tonnesat 2.80 g/t of gold for 1.96 million ounces of gold. This is comprised of an openpit mineral reserve of 21.0 million tonnes at 2.80 g/t of gold for 1.92 millionounces and tailings of 700,000 tonnes at 1.80 g/t of gold for 44,000 ounces.

The study also updated the measured and indicated mineral resourceestimate to 23.0 million tonnes at 4.14 g/t of gold for 3.06 million ounces of gold,using a 0.90 g/t of gold cutoff.