(MENAFN - ProactiveInvestors - Australia) KBL Mining (ASX:KBL) pre-feasibility study has confirmed robust economics at its Sorby Hills silver project in Western Australia with the project likely to present a post-tax NPV of 88 million.
A positive PFS will enable the company to take the project into the next phase of development.
The PFS shows that Stage 1 of the project will have less than two year payback period on a capex of 70 million with an initial 10 year operating mine life covering 27% of the global indicated and inferred resource.
It will also produce about 4 million ounces of silver and 100,000 tonnes of lead in the first five years.
The final environmental approval is expected by June 2013 with development to start in fiscal year 2014.
Sorby Hills is a major undeveloped, near surface silver-lead deposit which has been well defined by extensive exploration. The shallow nature of the deposits will allow for the extraction of ore by open cut mining.
The ore will be then be processed by conventional flotation to produce a silver-lead concentrate, ready for exportation through existing facilities at Wyndham Port, some 160 kilometres away by sealed road.
KBL holds 75% of the Sorby Hills project, with 25% held by the Australian subsidiary of Henan Yuguang Gold & Lead Co., which is China's largest gold, silver and lead group, incorporating mining and smelting operations.
The Sorby Hills tenements cover a total area of 12,612.4 hectares. There are a total of 13 individual mineralised deposits delineated by exploration, within these tenements.
The ore deposits form a linear belt (trending north-south) over an eight kilometre long and up to one kilometre wide strike length on the eastern margin of the Pincombe Inlier.
The Sorby Hills global Indicated and Inferred Resource is 16.7 million tonnes at 4.5% lead and 52 grams per tonne silver.
Stage 1 is contained within an area covering 1,787.27 hectares, and covers 1.5 kilometres of the eight kilometre strike. Stage 1 comprises three mineralised deposits (C, D and E) with a combined Indicated and Inferred Resources of 4.432 million tonnes at 4.29% lead and 44 grams per tonne silver at a 2.5% lead cut-off.
The most technically and financially viable mining arrangements for Stage 1 were found to be 400,000 tonnes per annum with an open pit mining operations, that has a strip ratio of 3.6, to a maximum depth of 70 metres.
Average production for the first five years is planned to be 800,000 ounces per annum of silver and 20,000 tonnes per annum of lead in concentrate. Ore Reserves for Stage 1 are expected to be released before the end of March 2013.