An updated feasibility study of the large, low-grade Las Cristinas gold-copper project Venezuela has boosted capital costs by 10% for developer Crystallex International (KRY-T).
The revised study pegs the project’s price tag at US$293 million, up from a year-ago estimate of US$265.5 million. The US$27 million increase is mostly owing to higher costs for building materials (up US$7.7 million), costs associated with delays in receiving the environmental permit (US$12.3 million), and inflation.
The new capital cost estimate does not take value-added tax (VAT) into account, as the company has applied for a VAT exemption during construction. By the end of July, Crystallex had arranged contracts and purchase orders for Las Cristinas totalling US$150 million.
Crystallex CEO Todd Bruce says his company has been advised that it is in “the final stage of a rational and thorough permitting process.”
He adds that the project has the support of Venezuela’s National Assembly, state and municipal governments, and the senior ministers involved in the permitting process.
Meanwhile, the global increase in commodity and labour costs have increased operating costs by nearly 19% to US$7.66 per tonne milled. Total cash costs (net of royalties) during the first five years are forecast at US$154 per oz., up from the previous estimate of US$125 per oz. In all, cash cost over the mine’s 41-year life span have risen by 7% to an average of US$221 per oz.
Those higher operating costs have resulted in a 2% decrease in proven and probable reserves, which now stand at 294.8 million tonnes grading 1.32 grams gold, for an estimated 12.5 million contained ounces. The estimate is based on a strip ratio of 1.57-to-1 and a gold price of US$350 per oz.
As a result measured and indicated resources have increased by 9% to 500.7 million tonnes running 1.1 grams gold, for 17.7 million contained ounces. Another 163.1 million tonnes of material averaging 0.9 gram gold is categorized as inferred resources.
The latest review of Las Cristinas also included several significant changes to the design and development plan. These include changes in the design of the tailings management facility, foundations and waste dumps, and switching to owner-operated mining of the saprolite ore.
Also geotechnical data gleaned from drilling earlier this year, and last year, has allowed an increase in the slope of the southern wall of the planned pit, which in turn has reduced the amount of waste material to be mined in that area by 30 million tonnes.
The drilling also encountered an essentially economically barren intrusive stock that explains the abrupt cut-off in grade on the southern margin of the main Las Cristinas deposit. Previously the company believed that the Conductora deposit represented a continuous zone of mineralization running to the southern boundary of the property.
Bruce says the presence of the intrusive allows the development of the diversion channel for the project without fear of sterilizing economic mineralization.
Las Cristinas is expected to produce an average of 270,000 oz. of gold annually over 41 years; production during the first five years is pegged at 304,000 oz. per year. The first pour is slated for early 2007, assuming the company receives the permit to impact natural resources in the third quarter of 2005.
In related news, arbitration is ongoing between government-owned Corporacin Venezolana de Guyana (CVG) and Vannessa Ventures (VVV-V). Vannessa contends that the government expropriated Las Cristinas from its 95%-owned subsidiary, MINCA, without compensation.
Last year, the company withdrew its lawsuit in favour of trying its luck with arbitration at the Wold Bank’s International Centre for Settlement of Investment Disputes.
Be the first to comment on "Las Cristinas costs rise, permit still pending"