Passendro Grows For Axmin

VANCOUVER — The measured and indicated resource in the Main zone of Axmin’s (AXM-V, AXMIF-O) Passendro project in the Central African Republic has grown by 30%.

With 16,500 metres drilled since the last resource estimate was issued — one that formed the basis for a 2008 feasibility study of the project — the measured and indicated resource in the Main zone of Passendro now stands at 19 million tonnes grading 1.5 grams gold for 948,000 contained ounces gold.

Overall, including the half-dozen other areas at Passendro, the measured and indicated resource estimate grew by 10% to 32 million tonnes grading 2 grams gold per tonne for 2 million contained ounces gold.

Passendro’s inferred resource for all areas weighs in at 21.7 million tonnes grading 1.6 grams gold.

In addition to the 19-million-tonne resource at the Main zone, Axmin also reports a separate and lower-grade resource of 27 million tonnes grading 0.52 gram gold in the measured and indicated categories and 35 million tonnes grading 0.48 gram gold in the inferred category.

The lower-grade resource estimate included mineralization at grades between 0.3 and 0.8 gram gold. The higher-grade resource included mineralization grading more than 0.8 gram gold.

While Axmin has targeted the higher-grade resource for development, president and CEO Mario Caron said in a press release that with the addition of the lower-grade resource, the project’s economics may improve.

In April 2008, Axmin outlined a 3-million-tonne-per-year project with a 5.9-year mine life and a capital cost of US$196 million that would produce about 203,000 oz. gold a year at a cash cost of US$379 per oz. gold.

Based on US$750-per-oz. gold, the project returned a net present value (NPV) of US$164 million discounted at 5% and an internal rate of return (IRR) of 29.4%.

At the time of the feasibility study, Axmin envisioned a 24-month construction period with production beginning in the third quarter of 2010.

However, aggressive plans took a hard hit when the Central African Republic announced it was restricting mineral rights on concessions in the country to gold. Axmin had previously held rights to a suite of precious, base and ferrous metals and had been developing the highly prospective Topa iron project.

While the decree did not wrench away Axmin’s rights to Passendro’s gold, it did shake investor confidence in the country.

But in Axmin’s latest press release outlining the resource increase, Caron signalled optimism that may help convince investors Passendro is still worth betting on.

“With the recent adoption of the new mining code, it is our understanding that the government will now turn its attention to processing pending (mine licence) applications,” Caron said.

Since releasing the feasibility study, Axmin has also addressed a tougher financing market with a scoping study of the project that considered a reduced scale.

The scoping study outlines a 1.3- million-tonne-per-year project with a capital cost of US$127 million. The project would produce about 100,000 oz. gold a year over an 11.5- year mine life and demonstrates an NPV of US$135 million and an IRR of 27%.

In both the feasibility and reduced- scale permutations, the Passendro project, about 60 km north of Bambari, would be a conventional open-pit mine with a carbon- in-leach plant.