By Philip Whiterow
Chaarat Gold (LON:CGH) is to use a heap leach method of production at its Tulkubash project in the Kyrgyz Republic to reduce costs and offset higher taxes.
Originally, Charaat had planned to use the CIL method to process ore at Tulkubash, but drilling last year identified a significant amount of shallow material that is amenable to heap leaching, it said.
The switch will mean lower upfront capital costs and ongoing power costs, but will not affect the timing of first production from Tulkubash, which is still expected in the second half of 2013.
An in-fill drilling programme last year has also enabled Chaarat to increase the JORC resource slightly to 5.76mln ounces, from 5.59mln ounces, though the grade has dipped to 4.03 grams per tonne (g/t) from 4.08g/t.
Dekel Golan, Chaarat’s chief executive, said: "We have maintained the momentum towards production. Our project team has submitted designs for approval and made significant progress with permitting.
“Through our strict control of capital expenditure and the revised approach to production, the company's cost of reaching production is going to be lower than we previously estimated.
“These savings have been mitigated by the effect of the changes in the new tax regime which have a negative effect of about US$15 million on our cash flow prior to becoming net cash generative.
“The final revised requirement for working capital will be confirmed once we have completed our detailed work on the revised mine plan and operating budget.
"The board remains confident that these funds will be available to us," he said.
Chaarat had previously said it wanted to raise a working capital facility of US$20 million to cover initial mining costs.
The company estimates that approximately 2.7 Mt of resource at Tulkubash at a grade of 2.06 g/t is suitable for heap leaching.
The deposit is open towards the north where Chaarat believes “significantly more” heap leachable material may be available.
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