Proactive Investors - Caracal Gold PLC (LON:GCAT) said a scoping study focused on the expansion of its flagship Kilimapesa Hill gold project in Kenya has highlighted the project’s robust economics.
The study envisages a 114% internal rate of return, a two-year payback period and US$93mln (£76mln) of free cash flows being generated over the 10-year life of mine.
“The extremely robust economics in tandem with the low strip ratio mine plan, and simple heap leach processing route to deliver circa 24,000oz gold per annum, underpins the potential of the project,” said chief executive Robbie McCrae.
With funding in place, the company said it now plans to fast-track the expansion project with completion anticipated towards the end of the first half of 2023.
"The company also has considerable upside potential with further resources already defined in the Kilimapesa Hill project along with the additional drilling planned on the hill in early 2023; we anticipate this will easily double the life of mine,” said McCrae.
“Additionally, as recently announced, the Vim Rutha prospect, a shear zone of about 4.9km parallel to the known orebody at the Kilimapesa Hill deposit, offers potential commercially viable ounces very close to the existing plant, further strengthening the opportunity.”
The scoping study is based on a gold price of US$1,700 an ounce for three months and then US$1,650 an ounce for remaining 10 years.
All-in sustaining costs for the expanded production are expected to be about US$1,095 per ounce.
In July, the East African gold producer revealed an updated mineral resource estimate for the Kilimapesa Hill deposit of 565,700 ounces of contained gold, taking the overall project resource to 14.05mln tonnes grading 1.56 grammes for 705,000 ounces of contained gold.