Lelde Smits: Hello I’m Lelde Smits for the Finance News Network and joining me today at the Symposium Resources Roadshow is Managing Director and CEO of Kentor Gold (ASX:KGL), Simon Milroy. Simon welcome to FNN.
Simon Milroy: Thanks Lelde.
Lelde Smits: Kentor Gold is an emerging base metals and mining company. Where are your projects located?
Simon Milroy: We’ve got the Andash copper gold project in the Kyrgyz Republic. Kentor owns 80 per cent of that, the other 20 per cent is held by the Kyrgyz Government. We also have 100 per cent of the Jervois copper project in the Northern Territory, and 100 per cent of the Murchison gold project in Western Australia.
Lelde Smits: Okay let’s get to your newly named Murchison gold project in Western Australia. What tenements does the project encompass and what do they include?
Simon Milroy: The Murchison project includes the Gabanintha gold project and the Burnakura gold project. There’s 20 old open-pits there and there’s one old underground mine. And we also have a processing plant, all of the things we need to restart gold production including camp, fuel farm, power station, everything.
Lelde Smits: So what stage is the Murchison gold project at now and when do you expect to be in production?
Simon Milroy: We’re currently refurbishing the existing plant and we plan to pour that first gold bar in June this year.
Lelde Smits: What is the size of the total resource and at what rate is initial production scheduled?
Simon Milroy: We’ve currently got an inferred resource of 720,000 ounces of gold. Now we’ve started a 20,000 metre drilling program, so we are planning to expand that. Now at the Burnakura site we’re planning a staged expansion of the project, so we’re kicking off initially at a rate of 24,000 ounces of gold per annum. Then we plan to expand that by adding a heap leach operation.
Lelde Smits: So Simon, how do you expect to support boosting production and extending the mine life?
Simon Milroy: First stage is restarting the existing plant. The second stage is to add the heap leach operation. The third stage is the doubling in capacity of the plant. So we plan to add one more bore mill, two more leach tanks and that will increase the plant to around 500,000 tonnes per annum.
Lelde Smits: When do you expect phase two and three will kick in?
Simon Milroy: Phase two, we expect to start construction early next year and phase 3 is likely to be later in 2013.
Lelde Smits: And what are your forecast cash operating costs for this expansion?
Simon Milroy: For phase one, we plan to start off relatively small scale and the cost is high, so initially its $1,220 per ounce. In phase two, we expand the production and it’s very low operating costs, so expect production to increase and the operating costs to reduce in phase two.
Lelde Smits: Now if we can turn to Jervois in the Northern Territory. What does the resource contain?
Simon Milroy: Currently we’ve got 12 million tonnes at 1.3 per cent copper and about 25 grams per tonne silver. So that’s equivalent to about 150,000 tonnes of contained copper and about 10 million ounces of silver.
Lelde Smits: What have initial feasibility studies uncovered and what are your plans for future studies?
Simon Milroy: We’re currently putting the finishing touches to a scoping study. So we’ll come out to the market with that next month and we plan to move it straight on to a full definitive feasibility study, after that. So the scoping study’s based on a 1.5 million tonne per annum flotation plant and it will be producing about 20,000 tonnes of contained copper per year, plus credits of gold and silver.
Lelde Smits: Turning to your Andash copper gold project in the northwest of the Kyrgyz Republic of central Asia. When and who did you acquire
the project from?
Simon Milroy: We purchased 80 per cent of the Andash project from an AMS listed company, called Aura Mining that ran into trouble in the GFC. The other 20 per cent is now held by the Kyrgyz Government.
Lelde Smits: So what does the resource include and do you have plans for production?
Simon Milroy: We have a resource of 19 million tonnes of ore at 1.1 gram per tonne gold 0.4 per cent copper and the project is ready to start construction. So we’ve completed the feasibility study, we own the mining equipment and the project’s been delayed due to community issues for the past two years. And we expect to resolve them very soon and start.
Lelde Smits: And what is the potential for expansion at Andash?
Simon Milroy: So we kick off the project, we’re producing 70,000 ounces of gold per year and 7,400 tonnes per year of copper. And that’s based on the zone one ore body only - that gives us a six year mine life. Now there’re two other known ore bodies on the site and zone two and zone three, we need to drill them to bring them into the resource. But we expect to be mining at Andash for greater than 10 years.
Lelde Smits: Now Simon to your financials. What is your current cash position and are you funded for the rest of this year?
Simon Milroy: We currently have $33 million of cash and no debt, and that’s more than sufficient cash for everything that we are currently doing.
Lelde Smits: Lastly Simon, with plans to be producing in the first half of this year, where would you like to see Kentor Gold in the second half?
Simon Milroy: In the second half of this year, we’ll be in production at the Murchison project. We should be well and truly into a definitive feasibility study at Jervois, and we hope that we’ll be well and truly underway with the construction at Andash.
Lelde Smits: Simon Milroy thanks for the introduction to Kentor Gold and all the best as you move towards producing.
Simon Milroy: Thanks.