Kingsrose updates S. Sumatra gold/silver project
Monday, November 3 2008 - 05:38 AM WIB
WAY LINGGO PROJECT ACQUISITION
During the September Quarter the Company satisfactorily completed corporate and technical due diligence on the advanced Way Linggo high grade gold/silver project located in Southern Sumatra, Indonesia.
Preparation of an Explanatory Memorandum to Shareholders and an Independent Experts report will be completed shortly and will be submitted to the ASX and ASIC prior to sending to shareholders along with the Notice of Extraordinary General Meeting to seek shareholders? approval of the acquisition of this Project.
Snowden Mining Industry Consultants Pty Ltd (?Snowden?) completed an independent valuation report on Way Linggo which will also be circulated to Shareholders with the Notice of Meeting.
As previously reported some of the Way Linggo Project current owners are directors of Kingsrose (Messrs Andrews, Phillips and Morris, the ?Vendors?) Consequently the proposed acquisition involves related parties. Accordingly, an Independent Board Committee comprising Managing Director David Hatch and Non-Executive Director Dennis Franks had been established to represent the interests of non-related shareholders. The Independent Directors and the Vendors are working together to accommodate recent changes in the financial markets and retain a dear focus on completing the acquisition (subject to shareholder approval) and bringing the project into production.
The Company continues to evaluate debt and equity project financing options and at the time of writing, several potential financiers are undertaking due diligence on the Project.
During the Quarter the project operator, PT Natarang Mining (?PT NM?), continued to progress underground development in ore on the 1020 mRL level of the North Vein ore body. Ore development within the Way Linggo North Vein continues to support the vein widths predicted by historical diamond drilling intercepts.
Snowden was retained to develop an updated Mineral Resource model of the Way Linggo veins using drilling and trench results as well as recent results from underground face mapping.
Based on their verification of data collection and analytical procedures, QNQC procedures and geological interpretation of Way Linggo, Snowden has classified the Mineral Resource estimate according to the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2004 edition). The Snowden Mineral Resource estimate is summarized in the following Table 1.
Snowden Way Linggo Mineral Resource reported above a 2.5 g/t AuEq cut-off, as August 2008
| ? | Classification | Tonnes (kt) | Au (g/t) | Ag (g/t) | AuEq (g/t) |
| North Vein | Measured | 334 | 11.38 | 172 | 14.2 |
| Indicated | 93 | 7.06 | 118 | 9.0 | |
| Inferred | 127 | 4.92 | 83 | 6.3 | |
| Sub-total | 554 | 9.17 | 143 | 11.6 | |
| Hanging wall split and central vein zone | Measured | - | - | - | - |
| Indicated | 75 | 5.26 | 69 | 6.4 | |
| Inferred | 40 | 4.24 | 46 | 5.0 | |
| Sub-total | 115 | 4.91 | 61 | 5.9 | |
| TOTAL | 669 | 8.44 | 129 | 10.6 | |
| Note: Gold Equivalent AuEq g/t is calculated as Au g/t + (Ag g/t / 60) | |||||
The Way Unggo Project is modelled on annual mine and mill production of 65,000 tonnes or ore, with metal production during the early years of operation expected to approximate 30,000 oz AuEq. Unit cash costs are expected to be in the range of US$200-300/oz AuEq.
To date, approximately 2,000 tonnes of ore, grading 20 g/t Au and 310 g/t Ag has been stockpiled from the underground development.
As PTNM continues development in the North Vein orebody, a high level of understanding and confidence both in the grade distribution for gold and silver, and the underground geotechnical conditions are being achieved. Snowden has been engaged to assist with mine stope design and subsequent mine scheduling to refine production and cashflow forecasts.
Throughout the quarter, PTNM continued field mapping and sampling activities, with the objective of identifying and ranking additional drill targets. It is now apparent that the Way Linggo North Vein occurs within a much wider zone of alteration and that there are numerous other epithermal veins within the immediate mine vicinity. The Company therefore regards the mine area within the 105 km2 Contract of Work as highly prospective for future exploration success.
The Board and all parties to the acquisition of the Way Linggo project remain committed to completing the transaction, including obtaining the required funding to construct the processing plant. The primary objective remains to commission the plant and commence metal production in mid 2009 by initially treating high grade stockpiled ore. (end of excerpt)