Kimber advancing Monterde gold-silver project

After more than a decade of working on the Monterde gold-silver project in Mexico, Kimber Resources (KBR-T, KB-X) is starting to build momentum.

The company first outlined the economics of mining the Carmen and Vetas Minas veins at Monterde in mid-2010 and recently updated the preliminary economic assessment (PEA) based on an increased resource and metal prices.

Also this year, Kimber has been working through an over 40,000-metre drill program to upgrade resources into indicated for a pre-feasibility study underway, and the feasibility study it expects to start later this fall.

The efforts show a new drive for a company that spent the early years working on the project as a private company and went through significant change with a new management team, board of directors and exploration team in 2007.

Based on the recently updated PEA, Kimber has a plan that calls for mining 11.7 million tonnes in a combined open-pit and underground mine to produce 744,000 oz. gold and 20.2 million oz. silver over 15.5 years. Production averages 58,000 oz. gold and 1.9 million oz. silver per year during the first nine years, before the mine starts to transition to only underground mining.

Kimber has the operation running at 1,000 tonnes per day underground and 1,800 tonnes per day in the open-pit, mining at grades of 1.12 grams gold per tonne and 98.7 grams silver per tonne in the open-pit and 3.16 grams gold and 85 grams silver underground.

The study estimates capital costs at US$100 million, which is about US$11 million cheaper than the 2010 estimate because of a tighter pit design with higher grades and a lower strip ratio. The ratio was previously 13.8 but has been reduced to 6.25, while the improvements have also dropped open-pit mining costs from about US$25 per tonne to US$14.50 per tonne.

Financially, the company is looking at a pre-tax 47.9% internal rate of return and a net cash flow of US$295 million at an 8% discount, or 40.6% and US$211.9 million after-tax. Payback on capital costs is just over two years. The study factored in US$1,100 per oz. gold and US$19 per oz. silver.

Along with upgrading the resources, Kimber is also exploring the area both regionally and deeper under the resource. Recent deep drilling at Monterde returned 10 metres grading 11 grams gold and 3.6 grams silver in hole 117 from 584 metres downhole, which extended the Carmen structure.

The intersection in hole 117 is 150 metres along strike from hole 476 that hit 5.2 metres grading 78.4 grams gold and 127.9 grams gold, which the company released in late May.

The 293-sq.-km project sits about 260 km south of Chihuahua City in Mexico’s Chihuahua State. The Monterde mining district is classified as a low sulphidation, epithermal gold-silver deposit and is emplaced in a volcanic complex.

Only 2 km from the Carmen and Vetas Minas deposits sits the Carotare deposit that was excluded from the preliminary study. In an open-pit, 0.3-gram-gold cut-off, Carotare hosts 2.5 million indicated tonnes grading 0.75 gram gold and 16.2 grams silver for 60,500 oz. gold and 1.3 million oz. silver, and an inferred resource of 2.6 million tonnes at 0.63 grams gold and 17.1 grams
silver for 45,400 oz. gold and 1.2 million oz. silver. At a 2-gram-gold cut-off Carotare hosts 220,000 tonnes grading 3.07 grams gold and 58.6 grams silver for 21,700 oz. gold and 415,000 oz. silver, and roughly similar amounts in the inferred category.

The company recently closed an $8-million financing by issuing 5 million shares at $1.60. The company now has 82.3 million shares outstanding.

Kimber’s share price closed at $1.61, and has a 52-week share price range between 78¢ and $2.07.