An updated feasibility study of the large, low-grade Las Cristinas gold-copper project Venezuela has boosted capital costs by 10% for developer
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$27.5 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 a “rational and thorough permitting process” is currently in its final stage.
He adds that the project has the “published” 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 pushed the project’s operating costs nearly 19% higher 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 US$125 per oz. In all, cash costs 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 are classified 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 by 30 million tonnes the amount of waste material to be mined in that area.
The drilling also encountered an essentially economically barren intrusive stock that explains the abrupt cutoff 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 project’s diversion channel without fear of sterilizing economic mineralization.
Las Cristinas is expected to produce an average of 270,000 oz. gold annually over 41 years; production during the first five years is pegged at 304,000 oz. annually. 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
Last year, the company withdrew its lawsuit in favour of trying its luck with arbitration at the World Bank’s International Centre for Settlement of Investment Disputes.
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