NUS confirms robust, long-life, low cost gold project

By Meagan Evans. Published at Oct 4, 2018, in Small Caps

Asia‐Pacific gold development company Nusantara Resources Limited (ASX:NUS), has completed the Definitive Feasibility Study (DFS) for its 100% owned Awak Mas Gold Project located in South Sulawesi, Indonesia.

The project, which has all approvals in place for development, is one of just a few undeveloped gold projects within the Asia-Pacific region. It has an Ore Reserve of 1.1 million ounces, within a 2.0 million-ounce Mineral Resource.

The DFS supports an initial eleven-year project with the 2.5 Mtpa processing plant targeting annual gold production of around 100,000 ounces, delivering strong margins.

The mining operation will include two open pit mines with an initial 11-year life, and a low project strip ratio of 3.5.

The DFS base case determined a post-tax NPV of US$152 million, with a 20.3% IRR using a gold price of US$1250 per ounce. This included an initial capital cost of US$146 million, and an All-In Sustaining Cost (AISC) of US$758 per ounce.

NUS note the potential for improvement in project economics in the near-term as further infill drilling is completed and extensions to current deposits are drill tested.

However, it does remain a speculative stock and caution should be taken when deciding whether to engage in this product, however if you are not sure whether it is suitable for you we suggest you seek independent financial advice.

The DFS has identified the potential for an uplift in grade for the Awak Mas and Salu Bulo deposits as further drilling is undertaken to lift the reserve category to Measured status in the initial mining areas. Any grade uplift has a material impact on project economics. In addition, known extensions to the Awak Mas and Salu Bulo deposits and inclusion of the Tarra deposit into the mine plan have the potential to extend the mine life.

Scenario financial analysis of these near-term opportunities shows a 7% grade uplift and an additional three years of mine life (from known mineralisation extensions at Awak Mas and Salu Bulo and inclusion of the Tarra deposit into the mine plan) could significantly enhance project economics, resulting in a Project NPV in the vicinity of US$250 million, and an IRR of approximately than 25%.

Managing Director and CEO, Mike Spreadborough said, “The Awak Mas Gold Project Definitive Feasibility Study has confirmed that the project is technically feasible, financially robust, with significant opportunities to increase project value through optimising the current mineral resources and through further exploration. The completion of the DFS is a significant milestone for the Company, with work now progressing on securing financing for project development and continuing exploration.”

For now, the focus is on securing a strategic partner and arranging financing for the development of the project. In the meantime, exploration continues to identify new targets and is testing known prospects which have had minimal historical assessment.

Along with the DFS, the company also provided the market with an exploration update on the Awak Mas Gold Project.

Relationship of Near Mine, Brownfields and Greenfields exploration areas

The immediate exploration focus for 2018 is exploring Near Mine prospects within a three kilometre radius of the proposed processing plant with the aim of extending the proposed eleven-year mining operation. The program also includes the re-processing of previously acquired geophysical data which is demonstrating considerable potential for further discoveries across the entire Contract of Work (CoW) area.

Significant gold and copper results from surface and trench samples adjacent to the Awak Mas and Salu Bulo deposits which enhance near mine exploration prospectivity.

Salu Kombong

  • Three significant new gold and copper outcrops identified on intrusive related quartz veining covering an area of approximately 250m x 100m.
  • Assay results of up to 2.8 g/t gold and 1.2% copper sampled on extensive structures.
  • Nearby magnetic intrusive unit mapped, strong local geophysical signatures revealed.

Puncak Utara

  • Manually excavated trenches confirm mineralisation with grades up to 11.0 g/t gold.
  • Broad continuous zones of mineralisation, up to 12m at 2.39 g/t gold.
  • Extensive area of gold anomalism now defined over large footprint, approximately 750m x 1500m.

Puncak Selatan

  • First pass manually excavated trenches confirming surface mineralisation, up to 5.3 g/t gold.
  • Broad mineralised area has strategic value given immediate proximity to the planned Awak Mas pit
  • Geological model showing significant potential between Awak Mas and Salu Bulo.

Intrusive related mineralisation now confirmed at Salu Kombong, where newly reprocessed geophysics highlights multiple intrusive targets in near-mine areas and across the CoW area.

Surface exploration program has also commenced at the highly prospective Tarra Main area

The recent exploration results are extremely encouraging, which combined with extensive historic sampling, confirms the prospectivity of near mine areas and will be the focus of further mechanical trenching by excavator and subsequent drill targeting.

A number of untested or largely untested exploration prospects that have the potential to be satellite deposits have been identified within the area, both adjacent to the planned two initial open pits containing a 1.1Moz Ore Reserve and near to the proposed processing plant site.

Near Mine prospects showing selected historic and recent results; and prospect locations identified as gram x metre anomalies

Spreadborough said, “The completion of the DFS allows a shift in focus to CoW exploration. These promising early exploration results demonstrate the potential of the Awak Mas Gold Project to grow organically and provide potential high-grade satellite operations to augment production from the existing deposits. Our confidence in the exploration model, together with renewed focus on geophysics and the possibility of further and substantial discovery, add enormously to the future long-term viability of the project.

“Once again, we are seeing our understanding of the geology continue to rapidly evolve, which fits well with our goal of growing the project life beyond eleven years.”

In regards to the recent earthquake and following tsunami in Sulwaesi earlier this week, Nusantara management extended “our sincere condolences to everyone that has been impacted by the disaster.”

NUS also note that “our project is located on the east coast of Sulawesi so our people are safe and our site has not been impacted. However, because we haven’t been impacted, we have been assisting with the recovery and have donated food and water to those in need.”

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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