Alacer Gold defers South Kalgoorlie Expansion Project
TORONTO, July 16, 2012 /CNW/ - Alacer Gold Corp. ("Alacer" or the "Company") [TSX: ASR and ASX: AQG] announces that the South Kalgoorlie Operations Expansion Project ("SKOEP") in Western Australia will not proceed at this time. This decision follows a comprehensive review of the project which demonstrated that more time is required to allow additional geological and mine engineering work to be completed in order to ensure requisite returns on capital are achieved. Alacer continues to examine the many options available to unlock the value in this large, well-endowed goldfield.
Alacer's South Kalgoorlie Operations ("SKO") are located in one of the best mineralized gold systems in Australia (the Boulder-Lefroy Fault between Kalgoorlie's Golden Mile and the St Ives Gold Mines). The SKO tenements were under-explored for many years by the previous owners. Alacer, through its wholly-owned subsidiary Avoca Resources Limited ("Avoca"), acquired SKO in April, 2010. Since the acquisition, Alacer and Avoca have made exploration of the SKO tenements a strategic priority with the exploration focus on converting known resources to reserves to feed the existing 1.2 million tonnes per annum ("Mtpa") Jubilee processing plant at SKO.
During the past 18 months alone, Alacer successfully increased open-pit SKO Mineral Reserves (all in the probable category) by nearly 600% from 1.7 million tonnes at 1.4g/t gold for 78,100 ounces (as of July 2010) to 12.6 million tonnes at 1.3g/t gold for 542,000 ounces (as of December 2011, excluding Frog's Legs Reserves). The development work completed to date has been successful in that it has secured the near-term base load of ore to feed the existing Jubilee plant. It is interesting to note that the recent additions to reserves have been at an average grade of 1.4g/t gold that is 33% lower than the average Measured and Indicated Resource grade of 2.1g/t gold, implying the potential for future higher grade reserve conversions.
SKOEP was centered on replacing the current 1.2Mpta processing plant with a new 2.5Mtpa processing plant. The work completed has shown that the project requires a larger reserve base to provide sufficient confidence that the expansion will generate targeted returns on investment. The Company has completed extensive mine engineering work on HBJ (open pit and underground) and Mt. Marion West (underground) in an effort to quickly add higher grade reserves and accelerate the expansion project. The outcome indicates that additional work is required to achieve the required resource to reserve conversions.
Alacer plans to continue its current high level of exploration and resource conversion work and then, depending upon the outcomes of this work, consider proceeding with the expansion. Alacer believes the capital earmarked for this project could be better allocated elsewhere in its operations.
SKO has a large resource base that includes 25 separate deposits within 117 tenements covering 1,232km2. In addition to the current resources, Alacer has recently identified more than 300 new exploration targets that are now being evaluated, ranked and prioritized. Alacer remains confident that the exploration work in these historically-productive goldfields of Western Australia will yield the results necessary to justify SKOEP in the future.
In furtherance of this commitment to SKO, Alacer is investing $18 million in exploration during 2012 as part of its ongoing effort to convert the large resource base at SKO into reserves and to identify additional high-grade mineralization associated with the more than 300 new exploration targets at SKO. Recent exploration results, particularly from the SBS28 area, underpin Alacer's belief that higher grade and higher margin ore sources will be discovered and added into the SKO mine plan. (See releases dated May 7, 2012 and January 24, 2012.)
The 1.2Mtpa Jubilee processing plant at SKO will continue to operate in its current configuration while the work continues on exploration and resource conversion.
Edward Dowling, President and CEO of Alacer, stated "While our enthusiasm for the SKO district increases with every drill hole, the reserve base, although growing, remains insufficient at this time to justify the SKOEP expansion, particularly within the context of effectively managing risk within the challenging capital investment climate. Alacer will not produce ounces for ounces' sake and remains focused on a disciplined growth strategy. All of Alacer's decisions to invest in growth projects will be based on a rigorous evaluation using multiple economic criteria. While the expansion of SKO will be deferred until the necessary exploration and mine engineering work is completed, Alacer intends to continue to execute its organic growth strategy by deploying capital in other parts of the business."
Since the expansion project started, Alacer has invested A$7.8 million on engineering, design and procurement of long-lead time capital equipment. A further A$3.8 million will be spent over the coming months to complete the purchase of the capital equipment such as the ball mill, all of which will be stored until utilized. Further, approximately A$9.5 million has been spent on pre-stripping of open-pit waste in addition to approximately A$6.0 million for the power line relocation which will be amortized over the life of the mine.
Demobilization and standing down of a portion of the mining fleet will result in a one-time charge of A$4.3 million which will be recorded in the second quarter of 2012. These one-time charges will have no impact on production costs.
Alacer will host a conference call on Monday, July 16 at 6:00 pm (North America Eastern Daylight Time) and Tuesday, July 17 at 8:00 am (Australian Eastern Standard Time). The presentation for the conference call is available at www.AlacerGold.com.
You may participate in the conference call by dialing:
|1-888-312-9852||for U.S. and Canada|
|800-968-103||for Hong Kong|
|0-800-404-7656||for United Kingdom|
If you are unable to participate in the call, a recording of the call will be available on Alacer's website at www.AlacerGold.com or through replay until July 30, 2012 (North America) by calling:
|1-888-312-9852||for U.S. and Canada|
|800-968-103||for Hong Kong|
|0-800-404-7656||for United Kingdom|
Alacer Gold Corp is a leading intermediate gold mining company with interests in multiple mines which provide ore to three processing facilities in Australia and Turkey:
- 80% interest in the Çöpler Gold Mine;
- 100% interest in the Higginsville Gold Operations;
- 100% interest in the South Kalgoorlie Gold Operations; and
- 49% interest in the Frog's Leg Gold Mine.
Alacer's operations produced a total of 421,204 ounces of gold during 2011.
Alacer is pursuing a rapid growth strategy. The primary focus is organic growth from current operations and the Company's extensive gold and copper exploration properties in Australia and Turkey.
The preparation of Alacer's Mineral Resources and Reserves has been completed under the supervision of Qualified Persons as defined under NI 43-101. These Qualified Persons are detailed in Alacer's Annual Information Form filed with the Canadian securities regulatory authorities on March 30, 2012.
The disclosure in this report has been compiled and approved by the following employees of Alacer:
- Mr. Chris Newman, BSc (Hons), MAusIMM, MAIG, Executive Vice President, Exploration, in regards to exploration results and Mineral Resources; and
- Mr. Paul Thompson, BSc(Hons), MSc, FAusIMM, Vice President, Technical Services, in regards to Mineral Reserves except for Çöpler Oxide and Sulfide.
Mr. Newman and Mr. Thompson have sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and a Qualified Person pursuant to NI 43-101. They consent to the inclusion in this report of the matters based on this information in the form and context in which it appears.
Except for statements of historical fact relating to Alacer, certain statements contained in this press release constitute forward-looking information, future oriented financial information, or financial outlooks (collectively "forward-looking information") within the meaning of Canadian securities laws. Forward-looking information may be contained in this document and other public filings of Alacer. Forward-looking information often relates to statements concerning Alacer's future outlook and anticipated events or results and, in some cases, can be identified by terminology such as "may", "will", "could", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "projects", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts.
Forward-looking information includes statements concerning, among other things, matters relating to proposed exploration, communications with local stakeholders and community relations, status of negotiations of joint ventures, weather conditions at our operations, commodity prices, mineral resources, mineral reserves, realization of mineral reserves, existence or realization of mineral resource estimates, the development approach, the timing and amount of future production, timing of studies and analyses, the timing of construction of proposed mines and process facilities, capital and operating expenditures, economic conditions, availability of sufficient financing, exploration plans and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, regulatory and political factors that may influence future events or conditions. Such forward-looking information and statements are based on a number of material factors and assumptions, including, but not limited in any manner to, those disclosed in any other of Alacer's filings, and include exploration results and the ability to explore, the ultimate determination of mineral reserves, availability and final receipt of required approvals, titles, licenses and permits, sufficient working capital to develop and operate the mines, access to adequate services and supplies, commodity prices, ability to meet production targets, foreign currency exchange rates, interest rates, access to capital markets and associated cost of funds, availability of a qualified work force, ability to negotiate, finalize and execute relevant agreements, lack of social opposition to the mines, lack of legal challenges with respect to the property of Alacer and the ultimate ability to mine, process and sell mineral products on economically favorable terms. While we consider these factors and assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.
You should not place undue reliance on forward-looking information and statements. Forward-looking information and statements are only predictions based on our current expectations and our projections about future events. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in Alacer's filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, Alacer does not intend, and undertakes no obligation to update any forward-looking information to reflect, among other things, new information or future events.
SOURCE ALACER GOLD CORP.