Trans-Siberian Gold reports scoping study results for Rodnikova

Russia-focussed Trans-Siberian Gold announced the results of an independent scoping study for its wholly-owned Rodnikova Project in Kamchatka, Far East Russia on Friday, reporting a potential life-of-mine of 14 years.

The AIM-traded firm said the life-of-mine was based on a JORC-compliant mineral resource estimate of 6.3 million tonnes, at an average grade of five grams of gold per tonne.

Life-of-mine gold production was put at 517,000 ounces at an average grade of 4.03 grams per tonne, with life-of-mine silver production said to be 3.06 million ounces at an average grade of 28.9 grams per tonne.

Sub-level stoping and underground mining methods were assessed to be “optimal” for the project, along with a conventional carbon-in-leach processing plant with a processing capacity of 500,000 tonnes per annum.

Gold recovery was reported at 94% at a cut-off grade of 3.5 grams per tonne, calculated based on a price assumption of $1,250 per ounce.

The board said the production schedule did not include any potential future exploration success and mineral resource growth.

Looking at the project’s costs and economics, Trans-Siberian said the life-of-mine revenue was put at $715m, with a life-of-mine free cash flow of $126m and capital expenditure of $133m, of which $82m was initial construction expenditure in the first year.

Economics at a life-of-mine gold price of $1,600 per ounce, including the application of TOR, were a post-tax net present value at a 10% discount of $177.6m, and a post-tax internal rate of return of 59.2%.

At a gold price of $1,300 per ounce, life-of-mine economics including the application of TOR were a post-tax net present value at a 10% discount of $92.4m, and a post-tax internal rate of return of 35.3%.

The company reported a discounted payback period of four years applying TOR, or a maximum of six years excluding TOR.

“The Rodnikova Project scoping study has delivered viable project economics based on cautious and conservative assumptions,” said chief executive officer Alexander Dorogov.

“As with all scoping studies there is a significant amount of work to be completed before a definitive investment decision can be made.”

Dorogov said Trans-Siberian was “committed” to progressing with the exploration and development required in order to advance towards a pre-feasibility study.

“At this stage, we're pleased with the positive economic indications and upside potential to enhance the project which if advanced would bring significant socio-economic benefit to the people of Kamchatka.”

At 0836 GMT, shares in Trans-Siberian Gold were down 0.26% at 94.75p.