The PFS is based on contract mining and the processing plant is based on the final metallurgical flow sheet developed earlier this year (see news release dated February 21, 2013). The flow sheet envisages flotation, a gravity recovery circuit followed by concentrate regrinding and a standard carbon-in-leach ('CIL') circuit. This flow sheet is common in the gold processing industry. The LOM cash operating cost averages $724/oz at steady state production.
The capital costs for the Project (determined to a nominal accuracy of -15% to +25%) and including a 10% contingency, is estimated at $286.4 million. This is a 10% increase over the PRU which envisaged a 4 million tonne per annum process plant (25% smaller than the PFS design). The capital cost breakdown is $102.5 million for the process plant, $122.0 million for project infrastructure and $61.9 million for project indirects, services and owners' team. Excluded from the PFS is the ability of the plant to increase throughput rates by +/-10% whilst processing softer oxides ores early in the mine life. This will be included in the DFS.
The project has the capacity to generate pre-tax cash flow of $115 million per annum at an average gold price of $1,400/oz over the life of mine. The project will deliver an average annual free cash flow of approximately $87 million after taxes, royalties and sustaining capital.
The Company will file a Technical Report as defined by NI 43-101 on www.sedar.com within 45 days of the date of this release.
Commencement of a DFS
The Company will commence the DFS immediately and has awarded the study to DRA Mineral Projects in South Africa with the view to completing the study in the fourth quarter of 2013. As a significant amount of work has already been done on the Project, only three key elements remain for DFS completion, as follows:
-- A metallurgical testwork program focusing on the optimisation of the flotation reagent suite which could result in the reduction of the concentrate mass pull through the float plant to further optimize the process flow sheet and associated costs.-- Detailed mine design using the PFS developed modifying factors to improve the conversion of Mineral Resources to Mineral Reserves.-- Detailed engineering design to estimate the capital cost to +/-10% accuracy.
Metallurgical testwork will commence immediately on representative samples, previously shipped to the Amdel testing facility in Australia. The test campaign is to be conducted at the ALS laboratories in Perth. The results from the program will be used in the detailed design phase of the project.
The detailed mine design has already commenced at DRA Mining with the objective to include the deeper sections of the ore body, classified as Measured and Indicated Resources, in the next phase of the project. This is anticipated to extend the life of mine and therefore improve the project economics further.
The Esaase permitting process is well advanced and is anticipated to be completed before the end of this year. The Environmental Impact Statement (EIS) is well advanced and Asanko anticipates the lodgement of the draft EIS to the Ghanaian Environmental Protection Agency (EPA) in the coming weeks.
Commenting on the PFS, Asanko's President & CEO Peter Breese said, "The positive PFS continues to de-risk the Project and move Asanko closer to fulfilling its objective of near-term, low cost gold production and cash flow generation. The financial results of the PFS clearly demonstrate that the Esaase project will be a mine that will generate significant cash flows into the future at a range of gold prices. We believe that there is strong potential to increase the life of mine and the economics of the project further.