Kimber rises on positive Monterde economics (June 14, 2010)

VANCOUVER — Kimber Resources’ (KBR-T) Monterde project in Mexico could produce 813,000 oz. gold and 21.4 million oz. silver over a 13.4-year mine life, according to a preliminary economic assessment that contemplates a combined open-pit and underground operation.

Monterde, which is in Chihuahua state roughly 260 km southwest of Chihuahua City, is home to three deposits: Carmen, Veta Minitas and Carotare. All three comprise high-grade gold-silver cores with lower-grade mineralization in an enveloping halo, and all three are within 2 km of each other.

The preliminary assessment, which is the first economic study completed at Monterde, concluded the project could support a combined open-pit and underground mine for 10 years, during which time the mill would churn through 2,500 tonnes of ore daily. After that, the underground operation could continue for another 3.4 years, supplying 1,500 tonnes of ore to the mill each day.

The open pit would provide a total of 5.2 million tonnes of mill feed carrying average grades of 1.71 grams gold per tonne and 122.2 grams silver per tonne. To mine the open-pit resources requires a strip ratio of 13.8-to-1. The underground mine would provide 5.4 million tonnes of ore grading 3.34 grams gold and 89.4 grams silver. Metallurgical testwork indicate miners should recover 95.6% of the ore’s gold and 61.8% of its silver.

The operation would produce an average of 60,600 oz. gold and 1.6 million oz. silver annually. It should cost US$254 to produce each ounce of gold, including silver as a byproduct credit.

The study predicted a capital cost requirement of US$111.4 million, including a 25% contingency. For that investment, Kimber should be able to build an operation generating a 21.4% after-tax internal rate of return, which would allow capital payback in 4.1 years.

Based on a gold price of US$875 per oz. and a silver price of US$14 per oz., the project carries an aftertax net present value of US$99 million, using an 8% discount rate.

The three Monterde deposits host 3.79 million indicated tonnes grading 4.19 grams gold and 163.9 grams silver plus 2.7 million inferred tonnes averaging 4.45 grams gold and 116 grams silver, based on a cutoff grade of 3 grams gold.

Lowering the cutoff grade to 0.3 gram gold to include the lower-grade envelopes around the high-grade cores at each deposit increases the resource count to 22.5 million indicated tonnes grading 1.06 grams gold and 53.7 grams silver plus 16.1 inferred tonnes averaging 1.05 grams gold and 35.8 grams silver.

Kimber hopes to expand the resources at Monterde. The company sees opportunities to expand the resources at the three existing deposits. And in 2009, Kimber undertook a significant mapping and sampling program within a 4-km radius of the Carmen deposit to identify new targets. The work generated three areas of interest, known as Veta Verde, Veta Norte and Veta 0409, and Kimber recently received drill permits to test the new zones.

The Veta Verde structure sits 2 km northeast of Carmen. Two mine workings of unknown age tap into a hydrothermal, strongly silicified breccia.

The structure strikes north, dips steeply to the west, and has been traced on surface for 750 metres. Surface chip samples from Veta Verde returned promising silver values, including 4 metres of 82 grams silver, 3 metres of 118 grams silver, and 4 metres of 250 grams silver.

At Veta Norte, zones of oxidation with some silicification range from 50 cm to 3 metres in width. Kimber has traced the structure for 200 metres on surface but it remains open to the southeast, where it is covered by overburden. An initial chip-sampling program returned silver grades between 26 and 187 grams silver.

And the Veta 0409 structure, which Kimber has tracked for 650 metres along strike, consists of irregularly filled fissures of banded crustiform quartz and hematite. The best results from 140 channel samples include 4 metres of 43 grams silver, 4 metres of 27 grams silver, and 6 metres of 16 grams silver.

Kimber is planning a small diamond drill program, totaling 2,000 to 3,000 metres, to test the three new targets once the rainy season ends in August.

News of the positive preliminary economic assessment lifted Kimber’s share price by 5¢ to close at 99¢.

The company has a 52-week trading range of 47¢-$1.87 and 68 million shares outstanding.