TIDMTSG
RNS Number : 6472P
Trans-Siberian Gold PLC
19 February 2021
19 February 2021
Trans-Siberian Gold plc
("TSG", the "Company" or the "Group")
Rodnikova Project Scoping Study
Trans-Siberian Gold plc (TSG.LN), a low cost, high grade gold
producer in Russia, is pleased to announce the results of an
independent Scoping Study for the 100% owned Rodnikova Project (the
"Project") in Kamchatka, Far East Russia prepared by SRK Consulting
(Russia) Ltd ("SRK").
Project Highlights
Production Potential
-- Life of mine ("LOM") 14 years
-- LOM is based on a Mineral Resource Estimate, reported in
accordance with the JORC Code (2012), of 6.3 Mt at an average grade
of 5.0 g/t gold
-- LOM gold production of 517,000 oz. at an average grade of 4.03 g/t
-- LOM silver production of 3,062,000 oz. at an average grade of 28.9 g/t
-- Sub-level stoping and underground mining methods assessed to be optimal for the Project
-- Conventional CIL processing plant with processing capacity of 500 kt per annum
-- Gold recovery 94%
-- Cut-off grade of 3.5 g/t, calculated based on $1,250/oz gold price assumption
-- Production schedule does not include any potential future
exploration success and Mineral Resource growth
Project Costs & Economics[1]
-- LOM Revenue of $715m
-- LOM Free Cash Flow of $126m
-- LOM CAPEX $133m of which $82m is initial/construction CAPEX in year 1
-- Economics at LOM gold price of US$1,600/oz (Management sensitivity)
o Including application of TOR:
-- Post Tax NPV(10%) of $177.6m
-- Post Tax Internal Rate of Return of 59.2%
o Excluding application of TOR[2]
-- Post Tax NPV(10%) of $117.6m
-- Post Tax Internal Rate of Return of 40%
-- Economics at LOM gold price of US$1,300/oz (SRK base case)
o Including application of TOR:
-- Post Tax NPV10% of $92.4m
-- Post Tax Internal Rate of Return of 35.3%
o Excluding application of TOR
-- Post Tax NPV(10%) of $45.8m
-- Post Tax Internal Rate of Return of 22%
-- Discounted Payback period of 4 years applying TOR, or maximum of 6 years excluding TOR
Socio- economic contribution
-- It is anticipated that, should the project advance, as a
major employer in the Kamchatka region the project would create
approximately 800 employment opportunities and generate significant
tax remittances to regional and federal governments
The Project Scoping Study is based on Indicated & Inferred
Mineral Resources, reported in accordance with the JORC Code
(2012), of 6.3 Mt at an average grade of 5.0 g/t gold, for a total
of 1Moz contained gold[3] . The Scoping Study has identified
economically viable development options which justifies the
advancement of the Project.
The Company believes that the Project continues to have
additional upside potential which it will evaluate through
additional exploration and a Pre-Feasibility Study ("PFS"). The
Mineral Resource Estimate is expected to increase in size and
confidence through further exploration.
At this stage of project evaluation, as is typical and expected,
a number of risks have been identified. In particular,
geotechnical, hydrogeological, environment and social impact risks
will be fully evaluated during the PFS with a robust mitigation
plan developed where appropriate.
The use of favourable incentives available under Kamchatka TOR
enhances the Project economics substantially and illustrates that
the Far East of Russia is highly attractive for foreign direct
investment.
Alexander Dorogov, Chief Executive Officer of Trans-Siberian
Gold plc commented:
" The Rodnikova Project Scoping Study has delivered viable
project economics based on cautious and conservative assumptions.
As with all Scoping Studies there is a significant amount of work
to be completed before a definitive investment decision can be
made. We are 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".
Contacts:
TSG
Stewart Dickson +44 (0) 7799 694195
Canaccord Genuity Limited
(Nominated Adviser & Joint Corporate Broker)
Henry Fitzgerald-O'Connor / James Asensio +44 (0) 20 7523 8000
Panmure Gordon (UK) Limited
(Joint Corporate Broker)
John Prior / Hugh Rich / Ailsa MacMaster +44 (0) 20 7886 2500
Hudson Sandler
(Financial Public Relations )
Charlie Jack / Katerina Parker / Elfie Kent +44 (0) 207 796 4133
About TSG
TSG is focused on low cost, high grade mining operations and
stable gold production from its 100% owned Asacha Gold Mine in Far
East Russia. The Company also holds the licence for the development
and exploration of the Rodnikova deposit, one of the largest gold
fields in South Kamchatka.
Additional information is available from the Company's website:
www.trans-siberiangold.com
Market Abuse Regulations
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR'). Upon the
publication of this announcement via Regulatory Information Service
('RIS'), this inside information is now considered to be in the
public domain.
Scoping Study Overview
Geology
The Rodnikova deposit includes two sites, Rodnikovoye and
Vilyuchinsky, located 5 km apart. The mineralization is classified
as epithermal low-sulphidation type.
The technical and economic evaluation of the Project is based on
the Mineral Resources Estimate for the Rodnikova deposit in
accordance with the JORC Code as of 20 January 2020.
The Mineral Resource Estimate for the Project is shown in the
table below.
Classification Tonnes Au Au Au Ag Ag Ag
(Mt) (g/t) (t) ('000oz) (g/t) (t) (Moz)
----------------- ------- ------- ----- ---------- ------- ------ -------
Rodnikovy
Indicated 3.1 5.3 16.1 519 43.9 134.9 4.3
Inferred 1.7 4.3 7.4 238 32.3 55.7 1.8
Vilyuchinsky
Inferred 1.5 5.3 7.9 253 27.1 39.9 1.3
------------------ ------- ------- ----- ---------- ------- ------ -------
Total Indicated 3.1 5.3 16.1 519 43.9 134.9 4.3
Total Inferred 3.2 4.8 15.3 491 29.9 95.7 3.1
------------------ ------- ------- ----- ---------- ------- ------ -------
Notes:
1. Mineral Resources are reported in accordance with the
definitions and standards of the JORC Code and were originally
published by the Company on 10 February 2020
2. Mineral Resources were estimated at a cut-off grade of 3.0
g/t within underground mining outlines.
3. The Competent Person for the report of Mineral Resources is
Mr Robin Simpson, an employee of SRK Consulting (Russia) Ltd. Mr.
Simpson is a Member of the Australian Institute of Geoscientists
(AIG), and is deemed to have sufficient experience relevant to the
style of mineralisation and type of deposit under consideration and
to the activity undertaken to qualify as a Competent Person.
4. The report to support the Mineral Resource Estimate,
including JORC Code Table 1 reporting criteria, is available from
TSG's website.
SRK notes the deposit has the potential to increase Mineral
Resources as:
-- Mineralisation is open at depth;
-- Mineralised zones on the flanks are open along strike and
there is potential to add resources in the north.
Mining
To assess potential mineable reserves, pit optimisation was
performed, and potential mining limits were defined. Potential
reserves for underground mining were also estimated based on the
Indicated and Inferred Resources.
Optimised resources of Rodnikovoye site (including losses and
dilution) amount to 2.96 Mt; total metal (Au) is 16,400 kg; the
average grade is 5.53 g/t. Optimised resources of the Vilyuchinsky
site amount to 0.9Mt; total metal (Au) is 4,500 kg; the average
grade is 4.82 g/t.
Six mining methods have been considered:
Option Rodnikovoye site Vilyuchinsky site
------- ---------------------------------------- -------------------------
1 Sublevel Stoping Underground Mining
2 Sublevel Caving Open Pit
3 Sublevel Caving, Backfilling Underground Mining
4 Sublevel Caving, Backfilling Open Pit & Underground
Mining
5 Open Pit & Underground Mining (Sublevel Underground Mining
Caving)
6 Open Pit & Underground Mining (Sublevel Open Pit and Underground
Caving) Mining
------- ---------------------------------------- -------------------------
All resources are proposed to be mined using an underground
method as the base case scenario for Rodnikovoye and Vilyuchinsky
sites.
Based on the CAPEX and OPEX estimates, the optimum mining method
is represented by Option 1 (Rodnikovoye - sublevel stoping,
Vilyuchinsky - underground mining) and has been adopted as the base
case for the Project.
Underground mining schedule
Year
------- ----- ----- ----------------------------------------------------------------------------------------- ------
1 2 3 4 5 6 7 8 9 10 11 12 13 14 Sum
------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Ore
Mined Mt 0.15 0.42 0.42 0.42 0.42 0.42 0.42 0.42 0.39 0.24 0.22 0.13 0.10 0.07 4.2
Au g/t 4.0 3.6 4.6 4.2 3.8 4.3 3.7 3.3 3.5 4.4 4.5 4.7 5.4 5.9 4.0
Ag g/t 44.5 32.8 43.9 34.1 28.5 30.0 27.6 24.4 24.4 17.0 24.1 15.3 15.4 13.8 29.0
Au t 0.6 1.5 1.9 1.8 1.6 1.8 1.6 1.4 1.4 1.0 1.0 0.6 0.5 0.4 17.1
Ag t 6.5 13.8 18.4 14.3 12.0 12.6 11.6 10.3 9.6 4.1 5.4 2.0 1.5 1.0 123.1
------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ------
Processing
The proposed flowsheet consists of the following unit
processes:
-- Crushing: single stage, open circuit using a jaw crusher.
-- Grinding: a SAG mill operating in open circuit followed by a
ball mill operating in closed circuit with hydrocyclones. Grinding
will take place in the presence of cyanide, and so the grinding
circuit product will be thickened ahead of the Carbon-in-Leach
("CIL") circuit.
-- A 10 tank CIL circuit.
-- Cyanide detoxification using hypochlorite followed by pressure filtration of the tailings.
-- Metal recovery will use a standard elution and electro winning circuit.
The capacity of the circuit is 500 ktpa.
Infrastructure
The project is well situated to take advantage of regional
infrastructure. The site can be accessed via the main road from
Petropavlovsk-Kamchatsky which is also termed the "Mutnovsky Power
Station road". The road is mostly paved and is understood to be a
reasonable standard access road that does not require upgrading for
the mine development. There is a deep-water port at
Petropavlovsk-Kamchatsky. The North Mutnovsky Power Station is a
Geothermal Power Plant located south of the project. The main 220kV
transmission line between the Geothermal Power Plant and the main
grid bisects the project area.
Tailings Management
The Scoping Study assessment identified a series of filtered
tailings storage options for the Rodnikova Project. This study
includes a Dry Storage Facility options assessment, volumetric
modelling and preparation of material take offs, in order to
provide a +/-50% accuracy cost estimate for inclusion in the
Scoping Study financial model. A total of four alternatives were
modelled, in proximity to the proposed plant site. These were
traded off qualitatively to select a preferred configuration for
cost estimation.
Technical - Economic Assessment
Financial results of Technical - Economic assessment
Metric Units Option 1 Option 1
-----------------------------
Exc. TOR Inc. TOR
----------------------------- ---------- ----------- -----------
Ore - Rodnikovoye (t) 3,379,081 3,379,081
Grade - Rodnikovoye (g/t Au) 3.88 3.88
Gold - Rodnikovoye (g Au) 13,115,018 13,115,018
Ore - Vilyucha (t) 870,403 870,403
Grade - Vilyucha (g/t Au) 4.62 4.62
Gold - Vilyucha (g Au) 4,023,491 4,023,491
Gold production (oz Au) 512,775 512,775
----------------------------- ----------- ----------- -----------
Revenue ($m) 715 715
Total Operating Costs ($m) 418 363
Total Capital Costs ($m) 133 133
Net Profit ($m) 152 219
Free Cash Flow ($m) 126 194
NPV(10%) ($m) 46 92
IRR (%) 22 35
Payback Period (non
discounted) (years) 5 4
Payback Period (discounted) (years) 6 4
----------------------------- ----------- ----------- -----------
Post Tax NPV(10%) Sensitivity to Gold Price[4]
Gold Price NPV(10%) Exc. TOR NPV(10%) Inc. TOR
------------ ------------------ ------------------
$1,200/oz. $21.7m $63.9m
$1,300/oz. $45.8m $92.4m
$1,400/oz. $69.7m $120.7m
$1,500/oz. $93.6m $149.2m
$1,600/oz. $117.6m $177.6m
------------ ------------------ ------------------
Post Tax NPV(10%) Sensitivity (Exc. TOR) to Discount Rate
Gold Price Discount Rates
------------ -------- --------------- -------- --------
6% 8% 10% 12%
------------ -------- --------------- -------- --------
$1,200/oz. $42.5m $31.4m $21.8m $13.4m
$1,300/oz. $71.0m $57.5m $45.8m $35.5m
$1,400/oz. $99.5m $83.6m $69.7m $57.7m
$1,500/oz. $128m $109.6m $93.7m $79.8m
$1,600/oz. $156.5m $135.7m $117.7m $101.9m
------------ -------- --------------- -------- --------
IRR sensitivity to Gold Price (%)
Gold Price IRR (%) Exc. TOR IRR (%) Inc. TOR
------------ ----------------- -----------------
$1,200/oz. 15.8 27.7
$1,300/oz. 22.0 35.3
$1,400/oz. 28 43
$1,500/oz. 34 51
$1,600/oz. 40 59.2
------------ ----------------- -----------------
Capital Costs
For the base case development options, capital costs as derived
within the Scoping Study for the Project are set out as
follows.
Capital costs US$m
---------------------------
Underground capital works 25.57
Underground equipment 17.78
Plant 18.29
Plant equipment 12.30
Tailings 10.13
Infrastructure 19.90
Closure 7.00
Contingencies 22.19
Total Capital Costs 133.16
---------------------------- -------
Future works & recommendations for the Prefeasibility
Study
The assessment performed in the Scoping Study was based on the
most modern approach to designing and organising mining operations.
Within the framework of this approach, all the basic elements of
the Project were assessed, such as geology, mining, technology,
ecology, economics, and the economic effect of using new
solutions.
More detailed study work will be required in order to complete
engineering design to a higher confidence level, prior to the
Project being ready for a construction decision.
The majority of future work required, from a cost perspective,
will comprise drilling and exploration works, ultimately designed
to increase the size of the existing mineral resources as well as
potentially convert them into proven or probable reserves.
Exploration works
SRK notes that the deposit has the potential to increase Mineral
Resources.
In order to expand the mineralisation potential of the Rodnikova
area, it was recommended to look at options of exploring the
northern extension of the zone with infilling the grid to at least
60-80 meters mineralization intersections. Exploration work in this
case should be divided into stages, with each subsequent stage of
drilling to be based on assay results from the previous stage.
As for the Vilyuchinsky area, main zones containing Inferred
Resources require infill drilling to 40m x 40m between mineralised
intersections. Other zones intersected by trenches and individual
boreholes require more drilling to infill the grid to at least 80m
x 80m between mineralisation intersections.
Further studies and assessment
Various additional technical evaluations and assessments are
also required for a Prefeasibility Study to be completed at the
Project. These will include, but are not limited to, the
following:
-- Additional metallurgical testwork
-- Engineering studies to refine the process flow sheet in more detail
-- Infrastructure assessments including water and power supplies;
-- Baseline studies of the existing natural-environmental and socio-economic conditions
-- Preliminary environmental and socio-economic impact assessment
The Company plans to proceed with these works and studies in
2021 and will invest in exploration work, including drilling in the
course of the year.
Disclaimer
This announcement contains "forward-looking statements" - that
is, statements related to future, not past, events. In this
context, forward-looking statements often address our expected
future business and financial performance, and often contain words
such as "expects," "anticipates," "intends," "plans," "believes,"
"seeks," "should" or "will." Forward-looking statements by their
nature address matters that are, to different degrees, uncertain.
For us, uncertainties arise from the behaviour of financial and
metals markets, fluctuations in interest and/or exchange rates and
metal prices; and from numerous other matters of national, regional
and global scale, including those of a political, economic,
business, competitive or regulatory nature. These uncertainties may
cause our actual future results to be materially different that
those expressed in our forward-looking statements.
Competent Person
The Scoping Study was prepared by SRK Consulting (Russia) Ltd.
SRK's team includes specialists sufficiently qualified and
experienced to act as Competent Persons for reporting Mineral
Resources and Ore Reserves. The Scoping Study was managed by
Alexander Batalov. Mr Batalov is an employee of SRK, and a member
of the Australasian Institute of Mining and Metallurgy (AusIMM). He
has sufficient experience relevant to the style of mineralisation
and type of deposit under consideration and to the activity
undertaken to qualify as a Competent Person as defined by the AIM
Rules for Companies.
The information in this release that relates to the Scoping
Study, save for the NPV and IRR sensitivity analyses, is based on,
and fairly represents, information which has been compiled by Mr.
Batalov. Mr. Batalov has consented to the inclusion of this
information in the form and context in which it appears.
Technical Glossary
"Au" the chemical symbol of gold
"Ag" the chemical symbol of silver
"CIL" carbon-in-leach, a process in which carbon
is added to the solution following leaching
in order to extract gold
"cut-off grade" the lowest grade, or quality, of mineralised
material that qualifies as economically mineable
and available in a given deposit. May be
defined on the basis of economic evaluation,
or on physical or chemical attributes that
define an acceptable product specification.
"g/t" grams per tonne
"Indicated mineral a part of a Mineral Resource for which tonnage,
resource" densities, shape, physical characteristics,
grade and mineral content can be estimated
with a reasonable level of confidence. It
is based on exploration, sampling and testing
information gathered through appropriate
techniques from locations such as outcrops,
trenches, pits, workings and drill holes.
The locations are too widely or inappropriately
spaced to confirm geological and/or grade
continuity but are spaced closely enough
for continuity to be assumed
"Inferred mineral a part of a Mineral Resource for which tonnage,
resource" grade and mineral content can be estimated
with a low level of confidence. It is inferred
from geological evidence and assumed but
not verified geological and/or grade continuity.
It is based on information gathered through
appropriate techniques from locations such
as outcrops, trenches, pits, workings and
drill holes which may be limited or of uncertain
quality and reliability.
"JORC Code" the code for reporting of the Australasian
Joint Ore Reserves Committee, which is sponsored
by the Australian mining industry and its
professional organisations. The code is widely
accepted as a standard for professional reporting
purposes for reporting of mineral resources
and ore reserves.
"Measured mineral A part of a Mineral Resource for which quantity,
resource" grade (or quality), densities, shape, and
physical characteristics are estimated with
confidence sufficient to allow the application
of Modifying Factors to support detailed
mine planning and evaluation of the economic
viability of the deposit.
"Mineral Resource" a concentration or occurrence of material
of intrinsic economic interest in or on the
Earth's crust in such form, quality and quantity
that there are reasonable prospects for eventual
economic extraction. The location, quantity,
grade, geological characteristics and continuity
of a Mineral Resource are known, estimated
or interpreted from specific geological evidence
and knowledge. Mineral Resources are sub-divided,
in order of increasing geological confidence,
into Inferred, Indicated and Measured categories.
"Mineralisation" the process or processes by which a mineral
is introduced into a rock, resulting in a
valuable or potentially valuable deposit.
It is a general term, incorporating various
types; e.g., fissure filling, impregnation,
and replacement.
Further technical terms are available on the Company's website
at:
http://www.trans-siberiangold.com/media/1207/tsg-glossary-of-technical-terms-21.pdf
ENDS
[1] Scoping study Project economics have been prepared by SRK
using an LOM gold price of US$1,300/oz. Sensitivities to gold price
have been calculated by management to evaluate different Project
economics.
Silver price of $16/oz. applied throughout LOM.
[2] Advanced Special Economic Zones ("ASEZ") have been created
in the Far East of Russia under a "Territory of Advanced
Development" (also known as "TOR"), a special regime of treatment
of foreign investors who inject funds and capabilities to Russia's
Far East, whereby those foreign investors are provided with certain
incentives and benefits. In particular, there are reductions to
corporate profits tax, value added tax, land tax, mineral
extraction tax and social insurance payments. On 19 December 2019,
the Company confirmed that its operating subsidiary had been
confirmed as resident of ASEZ Kamchatka. The Company will apply for
the Project to be treated under the TOR regime in due course.
([3]) See RNS announcement dated 10 February 2020
[4] NPV and IRR sensitivity analyses have been prepared by TSG.
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