Shefa Yamim (ATM) Ltd (LON:SEFA) has received a technical economic evaluation (TEE) for Zone 1 of its Kishon Mid-Reach project that came in at the lower end of the cost curve.
The precious stone explorer said the TEE reported that a mine at the project could potentially process 1.5mln tonnes of gravel over an 11-year mine life, with a 1.8mln tonne overburden removed, and carry an estimated operating cost budget of US$26 per tonne (p/t) processed.
The capital expenditure (capex) for the development of the mine using new equipment has been estimated at US$11.3mln, the company said, adding that if contract mining was undertaken capex could be reduced to US$7.5mln but the operating cost budget over the life of the mine would rise to US$27p/t processed.
However, Shefa said Paradigm Project Management (PPM), who compiled the TEE, had identified several opportunities to “significantly reduce” capital and operating costs, such as using second hand equipment, upgrading the existing processing plant, contract mining, expanding the mineral resource, and, most importantly, increasing the mined throughput which could cut unit operation costs to between US$10-US$15p/t.
The firm said it had already invested significantly in the processing plant and machinery, which would help reduce operation costs, adding that it was planning further upgrades to the new processing equipment already purchased with the proceeds of its initial public offering (IPO), meaning only a further investment of up to US$1mln was required to double the processing rate to 100 tonnes per hour.
Avi Taub, chief executive of Shefa, said the report suggested that the costs of the project were “on a par with comparable diamond producers and at the lower end of the precious stone producers” and that the company could upgrade its plant and machinery for “a relatively small amount of investment”.
In mid-morning trading Wednesday, Shefa Yamim shares were steady at 57.5p.
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