Alamos Gold (AGI-T) outlines a positive mining scenario at its Turkish gold assets, Agi Dagi and Kirazli, and reveals an inferred resource for its Camyurt project, also in Turkey.
A recent prefeasibility study shows Agi Dagi and Kirazli could produce an average annual production of 166,000 oz. gold and 545,000 oz. silver over a combined nine-year life.
The study predicts first gold production at Kirazli in 2014, followed by Agi Dagi in 2016.
Kirazli and Agi Dagi, which sit 19 km apart in Canakkale province on the Biga Peninsula, are envisioned as 15,000-tonne-a-day and 30,000-tonne-per day operations, respectively.
Alamos expects to obtain final environmental impact assessment approval for Kirazli in early 2013 and for Agi Dagi by mid-2013, instead of in late 2012 due to the throughput rates being higher than projected in the March 2010 scoping study,
Despite the adjustment, the company says, the first gold pour at Kirazli remains unchanged, and slated for late 2014.
But Agi Dagi’s production timeline has been pushed back from 2015 to late 2016, notes Haywood Smith’s analyst Kerry Smith. Agi Dagi’s previous throughput was 15,000 tonnes per day, while Kirazli’s was 10,000 tonnes a day.
“This bigger design comes at an increased cost, US$424 million total capex compared to our US$335 million estimate, although a large proportion of the increase is attributable to the higher throughput,” Smith writes in a June 28 note.
Of the US$424-million capex, US$146 million will go towards building Kirazli and US$278 million for Agi Dagi.
BMO Capital Markets’ analyst David Haughton writes in a note that the preproduction and sustaining capital costs of US$424 million and US$70 million, respectively, were below his forecast of US$550 million and US$20 million, which included Camyurt.
Mine life at Agi Dagi is pegged at seven years and five years at Kirazli. Over this time, the two should produce 1.5 million oz. gold and 4.9 million oz. silver at total cash cost (net of silver credits) of US$579 per oz.
The study calculates a post-tax net present value of US$276 million, and internal rate of return of 22.3%, using a 5% discount and gold price of US$1,239 per oz.
Smith says the prefeasibility highlights strong returns for the projects which have minimal execution risk once permitted.
Along with the study, Alamos announced an initial resource estimate at Camyurt, which contains 640,000 oz. gold and 3.8 million oz. silver in inferred from 24.6 million tonnes grading 0.81 gram gold and 4.77 grams silver per tonne.
“Camyurt is only 3 km from Agi Dagi and would require very little incremental capital to develop as this project would be processed at Agi Dagi with either ore trucking or a conveyor to move ore to the plant,” explains Smith.
BMO’s Haughton suggests that the company could funds its development projects using cash on hand and cash from operations.
At the end of the first quarter 2012, Alamos had cash and short term investments of US$263 million and no debt.
For 2012, Alamos forecasts gold production of 200,000 to 220,000 oz. from its flagship Mulatos mine in Mexico.
Mulatos is expected to remain the company’s main asset after the development of its Turkish assets.
On the prefeasibility and resource news, the junior fell 9% to $14.52 on 1.4 million shares traded.
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