Mining News: Northern Neighbors: Kaminak budgets C$30M for Coffee

Kaminak Gold Corp. March 13 reported a 2015 budget of C$30 million for its Coffee Gold project in Yukon Territory. Roughly C$21 million will be spent on finalizing a feasibility study due to be completed early in 2016; about C$3.6 million will fund permitting-related activities; and the balance of some C$5.4 million is allocated to exploration, marketing and general expenses. Kaminak invested C$15.5 million on a work program related to the feasibility study during the second half of 2014. Including this year’s program, the cost of the feasibility study is now estimated be reach C$36.5 million, up from original estimates of C$30 million. Kaminak said changes of scope, finalization of consulting contracts and trade-off studies aimed at enhancing project economics contributed to the increased costs. A preliminary economic assessment completed in 2014 envisions an open-pit mine and heap-leach facility producing an average of 167,000 ounces of gold annually over an 11-year mine-life. At a gold-price of US$1,250 per ounce, the mine outlined in the PEA generates a pre-tax net present value (5 percent discount) of C$522 million and an internal rate of return of 33 percent. Trade-off studies being completed for the feasibility study include: an investigation of crushing to a coarser size and possibly placing run of mine material directly to the leach pads; the potential for adding gold from the upper transition zone into the final mine plan; and an alternate heap leach pad design and location. Kaminak said its exploration plans for 2015 remain modest and include continued work at Kona North with the aim of defining resources for inclusion in the final feasibility study as well as a continued evaluation of top priority exploration targets in the vicinity of the main resource. Four drills are currently completing infill and condemnation drilling programs at the Supremo zone. On March 11, Kaminak said it raised C$21 million through a bought deal private placement that involved the issuance of 12,223,000 Kaminak common shares at C90 cents each and 8,696,000 flow-through shares for purposes of the Income Tax Act (Canada) at C$1.15 per each.

—Shane Lasley