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KAGARA is planning to undertake a full $A184.5 million bankable feasibility study on development of its world-class Admiral Bay zinc-lead-silver deposit in Western Australia's Kimberley once it finalises financing. It expects to achieve this within the next six months. The news follows positive results from a prefeasibility study completed by RSV Australia for an initial 2.5 million tonne per annum operation at Admiral Bay which forecast revenues of $4.96 billion over an initial 10.2-year mine life. This would produce more than 1.5 million tonnes of lead concentrate, 1.5Mt of zinc concentrate and 18.97 million ounces of silver in concentrate, and result in a net cash flow of $675 million after capital payback of $997 million in less than four years with an internal rate of return of 12.5%. The figures were based on the initial treatment of 25.2Mt of ore over a 10.2-year timeframe using lead and zinc prices of $US26,000 per tonne ($A29,500/t), a silver price of $18/oz and a $US-$A exchange rate of 0.85. Pre-production capital, excluding the cost of the BFS, came in at $A812.2 million with payback expected in 3.8 years. As part of the BFS, Kagara plans to sink a 6.7m diameter shaft to 1428m depth to drill out a 1.2-kilometre section of the deposit to reserve status to support the financial modelling. It currently has inferred resources of 72Mt, grading 3.1% zinc, 2.9% led and 18 grams per tonne silver. However, other factors, including increased production rates, use of geothermal power and the utilisation of continuous mining equipment, will also be investigated as part of the BFS. Shares in Kagara were up 2.83% in afternoon trade to 54.5c.
