Chaarat Gold Holdings shares climbed Monday after the miner announced an increase in gold resources and a positive update on its Tulkubash project in Kyrgyz Republic.
Chief Executive Officer Dekel Golan said the Tulkubash project remains on track to begin production in the second half of this year using heap leaching which is expected to reduce capital costs and power requirements.
"Chaarat will benefit from the lower upfront investment and lower power requirements of heap leach processing, having identified both a significant amount of shallow material in the Tulkubash which is amenable to heap leaching and established the greater-than-expected open pit potential of the deposit," he said.
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Following last year's drilling, the company saw a 3.0% increase in gold resources to 5.76m ounces.
The Tulkubash project is expected to improve results when the firm starts the first stage of development which involves the processing of low-sulphur clean ore.
It is estimated that approximately 2.7 metric tonnes of resource at a grade of 2.06 gross tonnage are suitable for heap leaching at the prospect.
The company has previously announced it would raise a working capital of $20m to cover initial mining costs. However savings have been identified from the original project budget as the capital required to build a heap leaching pad is lower than a carbon in leach plant. Chaarat also cut costs in the construction of the access road to the site.
"Through our strict control of capital expenditure and the revised approach to production, the company's cost of reaching production is going to be lower than we previously estimated," said Golan.
"These savings have been mitigated by the effect of the changes in the new tax regime which have a negative effect of about $15m on our cash flow prior to becoming net cash generative. The final revised requirement for working capital will be confirmed once we have completed our detailed work on the revised mine plan and operating budget."
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