Trans-Siberian Gold shares plunge on revised resource at Asacha

Russia-focussed low-cost, high-grade gold producer Trans-Siberian Gold updated its mineral resource estimate for the Asacha Gold Mine in Kamchatka, Far East Russia on Wednesday.

The AIM-traded firm said the mineral resource at Asacha occurred in two zones - the main zone, currently being mined, and the east zone, which was not yet mined.

Its mineral resource estimate had fallen from 553,052 ounces of gold as at 31 December 2018, to 312,558 ounces as at the end of 2019.

Of that reduction, 58,048 ounces was put down to mining depletion, 78,937 ounces were due to sterilisation, and 2,522 ounces were lost to rockfall.

A negative difference of 84,448 ounces was due to new data and interpretation, and 16,539 ounces were put down to revised estimation parameters.

Trans-Siberian said the main zone hosted six defined veins, with the majority of the resource contained in two of those, being ‘QV1’ and ‘QV2’.

Three veins had been defined in the separate east zone.

The main zone had a strike length of around 1,500 metres, whilst the east zone was approximately 400 metres.

Trans-Siberian Gold said the mineral resource estimate for Asacha was updated by Seequent UK as at 1 December, with that company having updated the Asacha deposit's estimate at the end of every year since 2012.

The board said the purpose of the updates was to incorporate new data available from exploration, drilling, mining development and to account for mining depletion.

The focus of the mineral resource estimate had been to incorporate new resource drilling on QV1 and QV2 in the main zone, and QV25 in the east zone.

As it reported on 19 September and 22 October, preliminary internal estimates indicated that the existing in-situ resource may have been overestimated.

A complete re-analysis of the mineral resource estimate model inputs had now been undertaken, resulting in a reduction to the estimate, due to multiple contributing factors such as new drilling data, updated vein interpretations, revision of estimation parameters - in particular top capping - additional mine-induced sterilisation, and a change to reporting by linear cut-off grade.

“I am pleased with the work that the team at Asacha has done to update the mineral resource estimate,” said chief executive officer Alexander Dorogov.

“We have invested heavily in improving our understanding of the ore body through a significant drilling campaign which confirms our expectations and provides the basis for better mine planning out to 2024.

“The resource will be supplemented by additional ounces targeted in an accelerated exploration programme as well as existing stockpiles.”

Dorogov said a new drilling campaign of about 8,000 metres around vein 25 in the east zone was already underway.

“We are confident that we have the time, capital and skills to upgrade the mineral resource at Asacha.

“Formal guidance for 2020 will follow shortly, but at this stage we anticipate annual gold production to be in line with recent years.”

At 1521 GMT, shares in Trans-Siberian Gold were down 26.33% at 61.15p.