PERTH (miningweekly.com) – A scoping study by takeover target Mungana Goldmines has indicated that its recently acquired King Vol project, in Queensland, could be in production by 2017.

The scoping study estimated that some 35 900 t/y of zinc, 840 t/y of copper, 910 t/y of lead and 185 000 oz/y of silver-in-concentrate could be produced at the mine, delivering a net operating pretax average cash flow of A$35-million a year.

The project was expected to have an initial mine life of some four-and-a-half years.

The scoping study, which was based on a mining inventory of some 1.33-million tonnes, grading 11.9% zinc, 0.6% copper, 0.4% lead and 21.2 g/t silver, estimated that the King Vol project would require a capital investment of A$37.4-million, with an estimated A$7-million of additional funding required before the project became cash flow positive.

MD Tony James said on Thursday that the scoping study showed that King Vol was an exciting project capable of generating strong returns for Mungana shareholders, based on the consensus zinc price.

“King Vol has the enviable combination of high-grade resources, low operating and capital costs, and is highly leveraged to the zinc price. It also has the capacity to deliver a very solid platform for the company from which to increase production rates and mine life.”

C1 cash costs for the project have been estimated at 52c/lb zinc-in-concentrate, after by-product credits.

James said that, based on the scoping study results, Mungana now planned to complete a feasibility study and finalise project approvals with a view to starting production in 2017.

The King Vol asset was acquired by Mungana in June 2014, as part of a A$15-million transaction with shareholder Kagara.

Mungana was currently fending off a takeover offer from Auctus Chillagoe, which earlier this month increased its takeover offer from 13.5c a share to 17c a share, on the condition that it obtained a relevant interest of 70% or more.