Kingston Resources (ASX: KSN) recorded a June quarter of strong activity, marked by the restart of operations at the Misima gold project in Papua New Guinea and the Mineral Hill copper-gold mine in New South Wales .
The release of a Definitive Feasibility Study for Misima has confirmed the potential for a large-scale, long-life, low-cost open pit operation with an expected production of approximately 2.4 million ounces of gold. of gold and 5.6 Moz of silver over a 20-year lifespan.
The development would have a pre-tax net present value of $956 million and life-of-mine revenues of $6.1 billion, with an all-in sustaining cost of $1,217 per ounce.
An updated ore reserve jumped 28% from previous figures to 76 million tonnes grading 0.8 grams per tonne gold for 1.73 Moz.
Managing Director Andrew Corbett said the Definitive Feasibility Study was a great achievement for the Misima project.
“This represents a significant milestone for us and reflects the incredible work of our technical and operational teams who exceeded project expectations,” he said.
“With all of the necessary foundations now in place for a return to gold production at Misima, we look forward to advancing all necessary approvals, strategic and financing options to bring the mine into production.”
Mineral Hill Drilling
During the quarter, Kingston also made progress at its Mineral Hill copper-gold mine, achieving strong initial diamond and reverse circulation drilling results at the Pearse and Southern Ore Zone deposits.
A 39 meter intersection at 4.19 grams of gold per tonne and 37 g/t silver from 37 meters at Pearse North confirmed the high grade of the deposit and indicated the presence of significant gold mineralization at outside of the existing ore stockpile shell, which was determined using a gold price of US$1,300/oz.
Results from other holes at Pearse North were also considered very encouraging and included 10m at 6g/t gold and 33g/t silver at 72m.
High quality base metal results
Underground working of the southern mineralized zone returned high grade base metal results with significant precious metal credits including 10m at 2.12% copper, 10.4% zinc, 10.3% lead, 0.5 g/t gold and 81 g/t silver from 150 m.
Kingston said the initial hole returned “outstanding” results across a broader zone of mineralization, with maximum grades of 5.5% copper, 32% lead and 25% zinc.
The results should contribute to an updated mineral resource estimate for the southern mineralized zone before the end of the year.
A review of existing geophysical data also identified 10 new and untested near-mine targets, a short distance from Mineral Hill’s existing processing plant, which has been in care and maintenance mode since 2016.
The targets reflect lateral or down-dip (plunge) extensions, as well as potential offsets and replications of known mineralization.
Kingston has initiated a work program to restart surface and underground mining and associated processing at Mineral Hill.
An updated mineral resource estimate for the Pearse open pits is being prepared and will be released in the September quarter.
This will be followed by an updated estimate for the southern mineralized zone, mine design work, metallurgical testing to confirm the suitability of the historical processing scheme and an update of the reserves for both deposits.
Engineering studies began during the quarter to establish a refurbishment strategy and work program for the grinding and float circuits at the processing plant.
Preliminary discussions have also taken place with a number of potential operating partners.
Tailings storage sales
Processing operations at the Mineral Hill Tailings Storage Facility (TSF) continued to demonstrate improvements throughout the quarter, resulting in the delivery of record sales in June.
While throughput in April and May was impacted by unfavorable weather, tonnes mined increased 12% from the March quarter, with throughput rates consistently at nameplate level or above .
The grades of the ISR reserves continued to reconcile well, with a difference of less than 1% on tonnes and 3% on grade for the zones mined to date.
Kingston is working to establish access to the higher grade areas of the dam around its periphery, by removing lower grade, higher moisture material from the center of the dam.
This contributed to a 20% increase in mined grade during the quarter.
June quarter recoveries improved 13% from March quarter levels and are expected to continue to increase as mining moves deeper into the TSF.
Industry-wide cost pressures continued to challenge Mineral Hill’s reagent-intensive operations during the quarter.
The company’s on-site processing team has identified opportunities to reduce reagent consumption rates, but Kingston said those insights are unlikely to fully offset the increases.
All-in sustaining costs for the June quarter were $2,424/oz, which the company expects will improve in the current quarter as rainfall normalizes and continued benefits from improved grade and recoveries.
Kingston ended the quarter with a bank balance of $9.2 million, including $5.6 million in unrestricted cash and $3.6 million in restricted cash (environmental bonds).
Earlier this month, the company announced that it had secured a $10 million credit facility with Pure Asset Management to support work programs needed to restore mining production at Mineral Hill.
The first tranche of $5 million of this facility has already been drawn down and the second tranche will be available before the end of November upon the achievement of certain milestones related to the restart.
Kingston’s total exploration and development expenditures for the quarter were $4.3 million, of which $2.2 million was spent on the Misima project and $2.1 million on Mineral Hill.
The company made payments of $150,394 to associates or related parties reflecting fees, salaries and pensions paid to directors.