Study puts King-king mine value at $2-B

MANILA, Philippines – The joint venture between National Development Corp. (Nadecor) and American firm St. Augustine Gold and Copper Ltd. said the King-king copper-gold project in Compostela Valley has a “pre-tax, net present value of $2 billion.”

Officials of the joint venture said the preliminary feasibility study for the project showed it is economically viable.

“The intensive technical work that St. Augustine has invested in the PFS confirmed that this flagship mining project has the potential to generate great value and thousands of jobs for the Philippines,” said Nadecor president Conrado Calalang in a press conference on Thursday, September 19.

According to St. Augustine Country Director Clyde Gillespie, if construction works begin early 2014, “commercial operations will start by 2015.”

Calalang said the mine will directly employ 45,000 people. He added “there will be substantial training of employees.”

Read: Finally, Nadeco proceeds with King-king project

The 1,620 hectare King-king project is located in Pantukan town.

Below are the feasibility study’s key findings.

• The project will generate unleveraged pre-tax net present value of $2 billion and an estimated pre-tax internal rate of return of 24.8% (using an 8% discount rate, $1,250/oz gold price $3.00/lb copper price). 
• Mining rate will be approximately 178,000 tons per day for a 22-year mine plan.
• Average annual production during the first 5 years of full production is 270 million pounds copper, 360,143 ounces gold and 568,958 ounces silver with an average gold equivalent total cost of $454 per ounce. 
• There is an estimated initial capital expenditure of $2.04 billion. This will include the mine, the mill, on-off leach pad, power plant and port facility and $240 million in contingency costs.

More partners

With the findings, Nadecor and St. Augustine officials said foreign investors have expressed interest in financing the project in the future.

“There are big indications of partners coming in… they are Europeans and South Americans,” said Calalang. 

Calalang also expects the mine to be profitable on the back of high demand for metals.

“The demand for copper is coming out of Asia, including Korea, Japan, China and India,” added St. Augustine’s COO Tom Henderson.

The companies said the King-king project enjoys support from the Compostela Valley local government. – Rappler.com