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Jul 2011 - Alacer Gold

Alacer Gold Corp (AQG) – Targeting a ~50% Increase in Gold Production to >600,000ozpa (ERA estimate) by 2014

  • During February 2011, Avoca Resources merged with Anatolia Minerals to form Alacer Gold (AQG, with AVO shareholders receiving 0.4453 ANO shares). Alacer has a stated target of producing ~800,000ozpa by 2015, which does appear to be achievable. However, we/ERA have focused on AQG initially achieving ~600,000ozpa by 2014, based on its current 3 operations (Copler, Higginsville and South Kal) each producing ~200,000ozpa.
  • The operation with the greatest potential to increase production beyond 200,000ozpa appears to be Copler in Turkey due to achieving production rates of almost 23,000tpd in JQ2011, well above its rated crusher capacity of 15,500tpd (5.6mtpa) its current recoveries of ~54% which are expected to improve with crushing to ~70%or so, and the possibility of realising higher grades, with lower costs from copper and silver credits.
  • Our ~200,000ozpa "target" for Copler does not include the sulphide circuit expansion (yet to be approved after a BFS) which has been reported under its PFS as potentially achieving ~65,000oz in 2014, and then ~200,000ozpa to ~290,000ozpa for at least 10 years.
  • Alacer's Higginsville operation in WA currently produces ~170,000ozpa to 180,000ozpa with an AQG target of 180,000ozpa. While a number of open-cuts are now adding to the feed such as Fairplay and now Vine, the upside potential depends on what the newly re-opened Chalice underground mine is capable of achieving. And Chalice is non-SIG royalty, so its production costs are hence ~>$100/oz lower than Higginsville.
  • Alacer's South Kal operation (SKO) is based on its 1.2mtpa plant that treats 0.8mtpa of low grade ore and ~400,000tpa of >5g/t ore from its 49% holding in Frogs' Leg, which results in total SKO production of ~100,000ozpa. Should (as expected) the AQG board approve of a new 2.4mtpa plant constructed on the old New Cel location, and being fed by a Super-pit over the HBJ open-cut, then total production could increase to ~200,000ozpa.
  • Written by: Keith Goode
  • Sunday, 31 July 2011

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