The company also revealed that an independent mineral reserve statement is near completion and should be published shortly.
The statement, which is in accordance with the industry-standard JORC code, provisionally estimates a 1mln ounce mineral reserve, based upon a baseline PFS scenario that includes a gold price of US$1,300 an ounce and a cut-off grade of 0.4 grams per tonne.
Based on the preferred development option out of the 14 options considered by the PFS, the Pickstone-Peerless gold project in Zimbabwe should have a life of mine of more than 10 years; a peak production rate in excess of 100,000 ounces per annum; and an average all-in sustaining cost (AISC) of less than US$700 an ounce.
Based on an assumed gold price of US$1,100 an ounce, the net present value of the asset on a 10% discount has been put at US$124mln, with an average life of mine (LOM) cash cost of production of US$428 an ounce. The average LOM AISC cost has been pegged at US$653 an ounce, including a 7% royalty.
Upfront capital expenditure has been estimated at US$27.3mln, of which around half will be for the 20,000 tonnes per month oxide plant capital cost.
The PFS considers only the Pickstone-Peerless gold project and does not consider allocations of corporate costs. As at 31 October 2013, the company’s working capital totalled US$4.2 million.
On the basis of the plan schedule, production of first gold is estimated to take place within 11 to 14 months of project finance being secured.
On the subject of project finance, the company has agreed an indicative term sheet with a major African bank for the development of the project. The facility is subject to the usual due diligence and also on African Consolidated (AFCR) securing equity for the initial plant construction.
AFCR’s chief executive officer, Craig Hutton, said the PFS proves the robustness of the potentially world-class asset.
“As Zimbabwe charters its future direction towards reintegration into the global community, the company is positioned to be a major force in the local gold sector which may lead to further consolidation opportunities in the country. Whilst recognising the future opportunities, our focus and energy will foremost be on building Zimbabwe’s largest ever open pit gold mine and rewarding the company’s shareholders,” Hutton pledged.
Shares in AFCR were quoted at around 2.007p before the publication of the PFS, and shot up to 2.20p shortly after, up 6% on the day.