MANILA, Philippines - The King King copper-gold project of Nationwide Development Corp. and Canadian miner St. Agustine is seen to be profitable for its duration, results of the pre-feasibility study for the project showed.
The result released by the joint venture yesterday showed that the planned operation has a pre-tax net present value of $2 billion, and an estimated pre-tax internal rate of return of 24.8 percent.
This was arrived at using an eight percent discount rate, a $1,250 per ounce gold price and a $3 per pound copper price.
After tax, economic analysis assumes a six-year income tax holiday.
“The result of this advance preliminary feasibility study confirms that King King is an attractive project with robust economics that will bring significant value to our shareholders, our partner and the Philippines,†said Andrew J. Russell, St. Augustine’s CEO.
“The strong result of the PFS paves the way for St. Augustine and our joint venture partner Nadecor to continue the development of King-King including the remaining technical work and advancement of project financing,†he added.
The King King mine is a gold rich copper-gold porphyry deposits in Mindanao, having one of the largest undeveloped copper-gold deposits containing 3.16 billion pounds of copper, 5.43 million ounces of gold and 11.65 million ounces of silver.
The King King Project is one of the priority projects of the Mines and Geosciences Bureau (MGB).
“We are pleased that the millions of dollars and years of intensive technical work that St. Augustine has invested in the PFS have paid off and confirmed that this flagship project has the potential to generate value and thousands of jobs for the Philippines,†said Nadecor president Conrado Calalang.
Once operational, the mine is expected to produce more than 100,000 tons of ore daily throughout its 22-year mine life.
Construction of the mine is seen to commence in he fourth quarter of 2014 and operation to begin between 2015 and 2016.
The project has an initial capitalization of $2.04 billion that would cover the mine, mill, on-off leach pad, power plant, port facility and $240 million in contingency costs.
The PFS was prepared by M3 Engineering & Technology Corporation of Tucson, Arizona. The resource, reserve, and mine plan was developed by Independent Mining Consultants of Tucson, Arizona.
Once the mine is commissioned, it will employ 1,700. During the construction phase, it will have 5,900 employees.
The owners of the project have not yet signed an off take agreement with a commodity trader, but are considering to transport the concentrates produced in the mine to smelters in China, Japan, and Germany.
The joint venture is also in talks with independent power producers for long-term supply options.