AXMIN improves the Passendro Gold Project

18th Mar 2009, 8:15 pm by Sam Kiri In the mining business, sometimes it is necessary to make changes to the original plan particularly when economies falter and markets weaken. Such manoeuvres aim to preserve cash as well as shift focus to priority activities and projects. In what could be a similar situation, Canadian Venture listed Axmin Inc. (TSX.V: AXM) is now considering a reduction in the initial size of the project in light of the current project finance and economic climate.

Axmin has a portfolio of projects in central and West Africa and has a strong backer in its major shareholder, The Addax and Oryx Group. While the company has assets in Mali and Sierra Leone, the most advanced project is the Passendro Gold Project in the Central African Republic (CAR). The project is located in the centre of its 140 km long Bakala-Bambari permits in CAR has a total resource of 2.6 million ounces of gold (indicated resource of 1.8 million ounces in 23.2 Mt grading 2.4 g/t Au and inferred resource of 1.01 million ounces in 16.7 Mt grading 1.9 g/t Au). 

Axmin intends to reduce the project throughput to an average of about 1.3 million tonnes per annum ("tpa") (average 100,000 oz per annum). This is expected to reduce the initial capital cost (excluding working capital of US$2.1 million) by some 35% to US$127 million. While project payback remains at just over two years, the project life nearly doubles to 11.5 years. Meanwhile the total cash operating cost increases by approximately 14% to US$431/oz whilst Net Present Value ("NPV", 5% discount rate) and Internal Rate of Return ("IRR") at a US$750/oz gold price remain very attractive at US$135 million and 27% respectively. At US$900/oz the NPV and IRR increase to US$244 million and 41% respectively

Revised project economics suggest the move to be a sensible one particularly given the current economic climate. President and Chief Executive Officer Mario Caron comments the move would improve the risk profile with the increase in mine life and the reduced construction period timeline. Caron also reckons that higher grade feed in the first four years would allows for production levels averaging some 125,000 oz per annum with the option to subsequently expand the plant to handle lower grade ore and any additional resources that may be added through exploration across this very productive Gold Belt.

Axmin intends to complete a NI 43-101 mineral resource update at the Passendro Gold Project during 2Q2009. This update will integrate the drilling completed subsequent to the mineral resource estimate that was used in the feasibility study, and includes some 16,500 metres of core, of which nearly 14,000 metres was completed along the 4.5 km long Main Zone structure. The results and interpretation from the drilling suggests that the indicated resources could increase and may importantly simplify subsequent pit designs.