VANCOUVER — Besra Gold (TSX: BEZ) is laying the groundwork for its third gold mine with a feasibility study for a first stage of development at its Bau project in East Malaysia.
The Bau project covers a mineralization trend that hosts 3 million oz. defined gold within 100 metres of surface. Bau’s resources stand at 21.3 million measured and indicated tonnes grading 1.64 grams gold per tonne, plus 50.2 million inferred tonnes averaging 1.35 grams gold.
The tonnes sit in 13 deposits along the 15 km long, 8 km wide Bau trend. Besra plans to develop Bau with a mine at Jugen Hill, the northernmost zone along the Bau trend.
A new feasibility study outlines an open-pit mine at Jugen Hill, which is home to 2.44 million proven tonnes grading 1.47 grams gold, plus 6.48 million probable tonnes averaging 1.61 grams gold. A conventional processing facility would crush, grind and float 8,000 tonnes a day to produce 460,000 oz. gold over an initial four-year mine life.
The plan is to sell the gold in concentrate and side-step the capital costs involved in producing doré. Besra is discussing an off-take agreement with Asian smelters, and the company says one smelter has already submitted an indicative offer.
It would cost just US$92 million to build the operation. To access these funds Besra is in discussions to sell a minority interest in the project. The company is also planning to raise funds through an interim convertible-note issuance.
For that investment Bau should be able to produce an ounce of gold for an all-in cost of US$1,010. Using an 8% discount rate and a gold price of US$1,225, the study estimated Jugen Hill’s pre-tax net present value (NPV) at US$50 million and forecast it would generate a 24% pre-tax internal rate of return (IRR). At a gold price of US$1,400 per oz. the project’s NPV climbs to US$111 million and its IRR rises to 42%.
The deposit at Jugan Hill is steeply dipping, has been drilled to 380 metres below surface and remains open at depth. In fact, the gold grade seems to increase with depth. Just to the south Besra has identified the A12 Anomaly and the Jugan West zones. Moving south along the Bau Central trend sit the Say Seng, Sirenggok, Bekajang, Young’s Hill, Taiton A, Tabai, Umbut, Kapor, Pejiru Extension, Boring and Pejiru deposits.
Besra says the deposits represent near-surface tips of steeply dipping zones, and all of these zones remain open at depth. He estimates Bau Central could host 5–10 million oz. gold, and feed a central processing facility for at least 20 years.
“The initial four-year mine life will be extended, as nearby deposits are developed using existing plant and infrastructure, and having the effect of further improving the project economics,” said Besra CEO John Seton in a statement.
“Bau exploration remains at a relatively early stage, with multiple deposits at various stages of exploration development and many prospective zones as yet entirely unexplored,” Seton says. “Geologic potential for substantially higher-grade mineralization has also been identified at depth. The exploration success rate suggests that continued exploration has the potential to progressively expand resources and reserves over decades to come, with the potential to establish Bau as one of the major goldfields of Asia.”
Besra operates in three countries. The company’s two operating mines, Phuoc Son and Bong Mieu, are in Vietnam; Bau is near the northern coast of Malaysia, south across the East Sea from Vietnam; and Besra’s Capcapo gold exploration project is in the Phillipines, east across the East Sea from Vietnam.
© 1915 - 2014 The Northern Miner. All Rights Reserved.