St. Agustine Gold & Copper Ltd. is reviewing its project feasibility study for the King-king project in Compostela Valley, hopeful the multi-billion dollar open-pit mining venture could attract additional investments and finally take off the ground amid increasing demand for gold and copper.
“The current project feasibility study—which is being updated—was conducted in 2013, and thus includes precious metal prices and project costs from 10 years ago,” said Michael Regino, chief operating officer of St. Agustine. “We could not rightly determine at this point the degree to which the initial capex requirement of $2 billion will change because, for one, costs will definitely be updated and increased. But on the other hand, Mindanao now has excess capacity for power,” he added.
The original capital expenditure plan to put King-king into operation included a budget of $300 million for a coal-fired power plant to supply the electricity requirements of the mine.
Price assumptions in 2013 were lower than they are now. The assumed price for gold in 2013 PFS was $1,250 an ounce while for copper was $3 a pound. Regino noted gold fetches $1,900 an ounce at present while copper sells for $3.80 a pound.
The King-king mining claims are located in the town of Pantukan—part of an area that has one of the largest gold-copper deposits in the Philippines– granted by the government a mineral production sharing agreement in 2002. It has an estimated reserve of 617.9 million metric tons of ore, which has 0.300 percent copper content and 0.395 grams of gold per ton.
Regino is confident St. Agustine could find a suitable partner for the development of the King-king mine project given increasing demand for copper and the attractive rate of return offered by the project.
“Definitely, we would need copper for the EV revolution,” Regino told reporters, referring to the wiring requirements of electric vehicles.
“Currently, there is only an indicative valuation based on the 2013 project feasibility study and an investor’s equity in Kingking will have to be discussed and will also depend on the updated PFS. Although, the project will bear a high internal rate of return of 24 percent and a short payback period of 2.4 years after construction is completed,” said Regino.
King-king has an estimated mine life of 22 years.
The proposed open-pit mine will produce copper, gold and silver concentrate, copper cathode, and gold bullion. On average, St. Agustine expects the mine to produce every year 138 million pounds of copper, 236,169 ounces of gold and 506,504 ounces of silver.
