JOHANNESBURG (miningweekly.com) – Aim-listed African Consolidated Resources (AFCR) on Monday said the definitive feasibility study (DFS) on the initial phase of its 3.2-million-ounce Pickstone-Peerless gold project, in Zimbabwe, had been completed on time and within budget, with a maiden reserve of 136 000 oz at 2.06 g/t having been established.

The updated Joint Ore Reserves Committee-compliant reserve was based on a gold price of $1 500/oz, a cutoff grade of 0.4 g/t and the aim to generate in excess of $50-million cash over a five-year period. This strategy provided the company with a way to generate organic cash flows to reinvest in the development of Phase 2 of the operation to take it up to a capacity of 50 000 t/m.

The company indicated that, on the back of current market conditions and the requirement to raise funds to achieve production, it had prioritised cash generation from the Pickstone-Peerless gold mine, focusing on the oxide cap to generate near-term cash flow with low capital expenditure (capex) intensity.

"…the DFS relates to the oxide cap only, just one component of the much larger Pickstone-Peerless gold project and will support the funding of the much larger and higher-grade sulphide ore [Phase 2], outlined in the preliminary economic assessment.

“Restricting Phase 1 to the oxide cap reduces the capex that would otherwise be necessary and enables us to use plant facilities already in place. We have increased the funding requirement for Phase 1 principally to stockpile ore for four months to maximise early grade. Scheduling for implementation of Phase 1 remains on track for first production of gold in June 2014,” AFCR CEO Craig Hutton said in a statement.

To this end, AFCR decided that only the oxide cap would be considered in Phase 1 at a production rate of 20 000 t/m, as part of the two-phased strategy to exploit the previously reported openpit mineral inventory of 813 000 oz at 5.1 g/t.

AFCR said Phase 2 was currently being considered at a prefeasibility study level, which the company intended to have completed in September or October, together with a conceptual study of underground mining that would represent Phase 3.

South African construction, engineering and mining development company Basil Read subsidiary Basil Read Matomo was appointed as the lead contractor for the Phase 1 DFS and would remain for the DFS for Phase 2.

The updated resource estimate reflected 39.5-million tons of ore at a grade of 2.5 g/t, containing 3.19-million ounces of gold. A 0.5 g/t and 0.6 g/t cutoff was applied for near-surface material at Pickstone and Peerless respectively, and a 1.5 g/t cutoff had been applied for material deeper than 250 m below surface.