Monument nears production at Selinsing

VANCOUVER — Tucked away in rural Malaysia, Vancouver-based Monument Mining (MMY-V, D7Q1-F) has quickly and quietly been bringing online a respectably sized gold mine.

Monument acquired the Selinsing gold project in June 2007 and has since designed, funded and built a 1,200-tonne-per-day operation, ready to produce roughly 40,000 oz. gold per year through open-pit mining.

The Selinsing deposit currently hosts 4.82 million indicated tonnes grading 1.49 grams gold per tonne using a cutoff of 0.59 gram gold for 231,000 contained ounces. Selinsing hosts a further 10.3 million inferred tonnes averaging 1.17 grams gold for 388,000 oz.

Metallurgical testing has shown gold recoveries ranging from 92% to 95%.

The company started mining the open pit in July 2009 and poured its first gold from the gravity circuit that November, a little more than two years after acquiring the greenfield project. The gravity circuit has now produced roughly 18,800 oz. gold.

Since starting the gravity circuit, Monument has also installed the carbon-in-leach (CIL) circuit and is all but ready for full production. The CIL circuit was initially delayed by faulty agitators, but those have since been replaced.

The company is delaying an official launch until it can coordinate with local officials, who have political capital invested in the project. The mine is a big local employer, with only two of the 156 employees being expatriates. Monument has helped train some of the local chemists, engineers, accountants and labourers.

It has a five year exemption from taxes in Malaysia. The country has a 5% net smelter return royalty and a 35% corporate tax rate.

To provide room for growth, the company is in the midst of acquiring a nearby 130-sq.-km property from Malaysia-based Famehub. Monument expects to pay $1.5 million in cash and 14 million shares for a total value of $5 million.

The company already owns the Buffalo Reef prospect that is contiguous to the Selinsing gold project, with all targets located in the central gold belt of western Malaysia.

The deposit at Selinsing occurs along the north-striking Raub Bentong suture, a major fault that runs through peninsular Malaysia. Mineralization is hosted in several gold-bearing quartz veins and quartz stockwork in a package of sheared calcareous epiclastic sediments.

Monument acquired the Selinsing property for a total cost of $29.2 million, including $3.5 million in cash, a $9-million promissory note, 31.4 million shares at 50¢ and 5 million warrants.

At the same time as the Selinsing deal, the company secured the Buffalo Reef property from Avocet Mining (AVM-L) for $1.75 million cash, 15 million shares at 50¢ and 7.5 million warrants, and a $1.7-million promissory note.

It recently closed $13 million in financing through both convertible notes and a forward sale of gold. The $8 million in convertible notes have a five-year term with a payback of 122% of the principal amount and can be converted into units at 40¢ each. Units hold one share and one half-warrant, with full warrants exercisable at 50¢ each. The remaining $5 million was raised through forward gold sales.

Along with planned exploration, the company is looking to twin its mill, giving it the capacity to produce upwards of 80,000 oz. gold a year. Originally the two mills were to be built at the same time, but the company lost a $10-million credit facility in late 2008 after the financial crisis hit.

Monument’s share price recently closed at 33¢, trading within a 52- week range of 24¢-42¢. It has 156 million shares outstanding.