Misima PFS delivers potential large low-cost operation with Pre-tax NPV of A$822m and 33% IRR

Forecast gold production of ~130kozpa at AISC A$1,159/oz with compelling project economics, long life, low capital intensity and outstanding growth potential

A significant, long-life Asia-Pacific gold operation:

  • 130,000ozpa average annual gold production over a 17-year mine life. 
  • 5.5Mtpa mining and processing operation on a brownfields site with extensive mining history.
  • Conventional CIL plant fed by the main Umuna Open Pit and Ewatinona Starter Pit.
  • Low capital intensity with A$283m CAPEX including A$37m contingency.

Compelling project economics:

  • Life-of-mine (LOM) average AISC of A$1,159/oz.
  • LOM revenue of A$4.9 billion.
  • LOM free cash-flow of A$1.5 billion.
  • Pre-tax Net Present Value (NPV8%) of A$822m and 33% IRR at US$1,600/oz gold price. 
  • Pre-tax Net Present Value (NPV8%) of A$1.28b and 48% IRR at spot US$1,900/oz gold price.
  • Payback period of 4.7 years at US$1,600/oz gold price, reduced to 2.75 years at US$1,900/oz. 

Large high-quality Mineral Resource and Ore Reserves:

  • 1.35Moz Ore Reserve for a 10-year mine life based on Reserve ounces only.
  • 12.5% increase in global Mineral Resource from 3.2Moz to 3.6Moz Au.
  • Robust economics based on Reserve ounces only – pre-tax NPV8% of A$481m, 30% IRR and 5.4-year payback 

Significant upside to be unlocked as development studies advance:

  • Significant project upside to be delivered through drilling campaigns currently underway to identify additional near-surface ounces for early years of ore production
  • Work programs now being planned for next phase of studies

Kingston Resources Limited announced that it has taken an important step towards its objective of becoming a significant new low-cost, mid-tier gold producer in the Asia-Pacific region with the completion of a positive Pre-Feasibility Study (PFS) for its flagship 100%-owned Misima Gold Project in Papua New Guinea.

The PFS confirms the potential to develop a technically robust, large-scale, long-life, low-cost operation delivering gold production of 130,000oz per annum at forecast life-of-mine (LOM) all-in sustaining costs (AISC) of A$1,159/oz over a forecast 17-year mine life.

The PFS is based on the redevelopment of the brownfields site of the former Misima gold mine, which was operated previously as a successful 5.5Mtpa Carbon-in-Leach (CIL) open pit operation by Placer Pacific, producing 230kozpa over a 15-year production history.

Kingston plans to leverage off this strong production history and construct a new 5.5Mtpa CIL treatment facility and modern infrastructure on the footprint of the historic mine, establishing a new standalone, long-life gold mining and processing operation underpinned by two major ore sources – a cut-back of the existing Umuna open pit and an expansion of the existing small pit at Ewatinona in the Quartz Mountain area.

Together with the PFS, Kingston is pleased to report a maiden JORC Probable Ore Reserve of 48.3Mt @ 0.9g/t for 1.35Moz, which underpins the large scale, long-life Misima Gold Project, together with a further 12.5% increase in the global Resource to 144Mt at 0.78g/t for 3.6Moz. The Ore Reserve is based on a standalone mine plan and financial model excluding Inferred Resources. The PFS is based on a Production Target mine plan and financial model including Inferred Resources which demonstrates the potential for the project to grow beyond the Ore Reserve if further work can upgrade confidence in the Inferred Resources to at least Indicated status.

The scale and quality of the Mineral Resource and Ore Reserve, together with the brownfields nature of the Misima Project, the extensive mining and processing history, the relative softness of the ore and simplicity of the process flowsheet all give Kingston a high degree of confidence in the technical and commercial viability of the Project as the foundation for a long-term Asia-Pacific gold operation.

Kingston Resources Managing Director, Andrew Corbett said: “We are extremely excited to be able to report such strong results from the Pre-Feasibility Study, together with an impressive maiden 1.35Moz Ore Reserve and a further increase in our global Mineral Resource to 3.6Moz. This is a significant milestone for all stakeholders in the Misima Gold Project, and represents a meaningful step towards our goal of becoming a substantial new mid-tier Asia-Pacific gold producer.

“The PFS confirms a robust, large-scale, long-life, low cost operation delivering annual average production of 130,000 ounces at an extremely attractive average all-in sustaining cost of below A$1,200/oz. The contained gold metal in the mine plan comprises 64 per cent Ore Reserves and Indicated Resources, with the balance of 36 per cent derived from Inferred Resources.

“We also have confidence in our ability to convert these Inferred ounces to the Indicated category as drilling continues in parallel with the next stage of Feasibility work. Importantly, there was a high conversion of historic Resources to Reserves at Misima, which bodes well for the future performance of the operation.

“Other key takeaways for investors include the relatively low capital intensity for a gold project of this scale and mine life, with forecast capital expenditure of A$283 million. The compelling economic parameters speak for themselves, with life-of-mine revenue of almost A$5 billion, free cash-flow of A$1.5 billion, a pre-tax NPV of A$822 million using an 8% real discount rate and conservative A$1,600/oz gold price, and an IRR of 33%. These numbers jump to an NPV of A$1.28 billion and an IRR of 48% at the current spot gold price of US$1,900/oz.

“These are outstanding results that highlight Misima as one of the best undeveloped projects in the Asia- Pacific region. It is also a platform from which we will continue to unlock further value through the targeted drilling campaigns currently underway at Misima. We are now planning a number of additional work programs which will feed into the DFS, which is anticipated to commence during Q2 2021.”

Table 1: Misima PFS summary data 

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