Vancouver – European Minerals (EPM-T) has appointed Investec Bank and Nedbank to underwrite US$40 million each in debt financing to go towards development of the company’s 86% owned Varvarinksoye copper-gold project in northern Kazakhstan.
The 300-sq.-km property is near the village of Varvarinka, 130 km southwest of Kustanai (population: 200,000). Roads and electricity are in place, though power would have to be upgraded. The area has a history of large-scale mining.
Mineralization consists of stratiform deposits of massive-disseminated sulphide ore, vein-disseminated sulphide ores and stockworks, as well as supergene oxide ores and gossans. Mining would entail a series of pits.Bioleaching was previously being considered, but European Minerals now intends to use carbon-in-leach (CIL) and copper flotation.
The loan comes on the heels of the company filing a preliminary long form prospectus to fund the balance of the development of the project.
In November, a feasibility study indicated the Varvarinskoye gold-copper project can be mined profitably with projected capital costs of US$94 million.
The process plant and mine infrastructure are estimated to cost US$80 million; with US$14 million for prestripping and stockpiling. The stripping ratio is around 4-to-1.
At US$400-per-oz. gold and US$1.10-per-lb. copper, the net present value was estimated at US$371 with an internal rate of return of 41% and a payback period of 22 months.
The operating cost would be US$108 per oz. gold in the first six years and US$170 per oz. gold over the 15-year life of the mine, including copper credits. Including capital costs, the life-of-mine operating cost rises to US$219 per oz.
In its first decade, Varvarinskoye is expected to produce about 145,000 oz. gold and 18.4 million lbs. copper per year.
Varvarinskoye has proven and probable reserves of 2.3 million oz. gold and 269 million lbs. copper, based on a gold price of US$375 per oz. and a copper price of US$1 per lb. CIL ore comprises 45.3 million tonnes grading 1.06 grams gold and 0.06% copper, equivalent to 1.5 million oz. gold. The float ore comprises 15 million tonnes grading 1.66 grams gold and 0.81% copper, or 800,000 oz. gold and 269 million lbs. copper.