Avocet completes bankable FS on N. Sulawesi gold project

UK miner Avocet Mining announced Wednesday that it has completed a positive and bankable feasibility study at the Company?s North Lanut project in North Sulawesi.

According to the company, with an average gold recovery rate of 73 percent, the mine will produce about 50,000 ounces of gold per year for five years. Pre-production capital costs are estimated at US$11 million, including contingencies.

At a gold price of US$350/oz., and given total cash operating costs that average US$188/oz., pre-tax financial results show a net present value of US$15 million at a discount rate of 10 percent p.a., and an internal rate of return of 45 percent. There is scope for improvements in these results.

The Company is now proceeding to obtain all the necessary permits that are required to construct and operate the mine. A construction and mine management team is being assembled and the Company has commenced discussions with various parties on a financial package for the mine?s construction and working capital requirement, said the company.

The North Lanut project is designed to be an open pit mine using dump leaching for the recovery of gold.

In 2002 Avocet completed the purchase from Newmont Mining Corporation of an 80 percent interest with respect to a 6th generation Contract of Work (CoW) in Indonesia. The CoW consisted of a 460 square mile exploration property in North Sulawesi.

From the 37 gold occurrences identified by Newmont, the Company has focused on evaluating a gold project based on two adjacent deposits, Riska and Effendi, in an area known as North Lanut where exploration drilling by Newmont identified a mineral inventory of 800,000 ozs. The Company has now reduced the CoW?s area of interest to 200 square miles where the best exploration potential is believed to exist. (alex)