Kemin Expects Kazakhstan Moly and Tungsten Production by 2016

At 130,000 metric tons (MT), Kazakhstan‘s molybdenum reserves are among the world’s largest, according to the US Geological Survey. However, the country has not produced the metal since 2006, when it put out just 250 MT. 

By 2016, moly and tungsten exploration company Kemin Resources (LSE:KEM) hopes to change that.

Positive prefeasibility

On Tuesday, the company, which was formed in April of this year via a reverse takeover of GMA Resources by joint venture Kazakh-Russian Mining Company, said that a prefeasibility study carried out at its Kazakhstan-based Drozhilovskoye and Smirnovskoe deposits, ”confirm[s] that the projects are economically viable,” as per Metal-Pages.

More specifically, the Drozhilovskoye moly-tungsten deposit, which is located about 4 kilometers from Okrainka, a small settlement, is expected to have a 30-year mine life, while the Smirnovskoe moly-tungsten-copper deposit, situated about 41 kilometers north of Karabalyk, the district center in Northern Kazakhstan, is expected to have a mine life of 36 years.

The study also includes updated resource estimates for both deposits. Drozhilovskoye’s now sits at 139.8 million MT of ore containing 262,900 MT of moly at 0.188 percent and 64,300 tonnes of tungsten at 0.046 percent. Smirnovskoye’s comes in at 170.5 million MT of ore containing 221,700 MT of molybdenum at 0.13 percent and 17,100 MT of tungsten at 0.01 percent.

Based on those estimates, the two projects hold a net present value of US$1.55 billion at a 9-percent discount rate. Together they should produce 20,600 MT of molybdenum concentrate per year, along with annual tungsten production of 3,100 tonnes. Capital expenditure for both “is estimated at $267.4 million,” Metal-Pages states.

Commenting positively on the news, Altynbek Orynbassarov, Kemin’s chief operating officer, is quoted by IFA Magazine as saying, “[w]e have the opportunity to develop substantial rare metal projects that will, in our view, deliver significant long term profits to our shareholders in the years ahead.”

He believes the projects are two of “the most exciting molybdenum and tungsten projects awaiting development in the world.”

Up next

Kemin “expects a significant portion of the updated resource to be converted into the JORC compliant resource category shortly,” IFA Magazine notes.

Further, the company plans to begin a definitive feasibility study immediately, with completion slated for the second half of 2014, Metal-Pages states. Mining should commence in 2015 and 2016 at Drozhilovskoye and Smirnovskoye, respectively, with the former delivering its first saleable minerals in 2016 and the latter doing so in 2017.

Shares of Kemin rose 68 percent, to 15.50 pence, on the release of the news, but are currently trading at 14.40 pence, slightly down from that level.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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What to Look for in the New Kazakhstan Mining Sector