PMI Gold Corp. has reported the results of a positive, NI 43-101 compliant prefeasibility study (PFS) for its 100%-owned Obotan gold project in southwest Ghana. The project was previously operated by Resolute Mining and closed in 2002 after producing a total of 730,000 oz of gold at an average grade of 2.2 g/mt when the gold price averaged approximately $350/oz.

The current Obotan PFS was completed by GR Engineering Services. The study anticipates construction of a 3 million-mt/y hardrock carbon-in-leach (CIL) plant, with capacity of up to 3.84 million mt/y for soft oxides.

Gold production is forecast at 205,600 oz/y over an initial 11.2-year mine life. Initial capital costs are estimated at $183.5 million, excluding a pre-strip mining cost of $68.3 million. Life-of-mine cash costs are forecast at about $690/oz, including royalties, refining costs and pre-strip mining.

A definitive Obotan feasibility study is under way and is targeted for completion by the end of the second quarter of 2012, leading to a development decision in the third quarter. PMI currently anticipates start of mine development activities during the first quarter of 2013 and full production in 2014.

Obotan project planning is based on an NI 43-101/JORC compliant estimate of combined proven and probable mineral reserves totaling 2.26 million oz at 2.32 g/mt gold. A resource update is scheduled for the first quarter of 2012, incorporating the results of 28,800 m of additional diamond core drilling.

The overall Obotan project mining sequence is based on starting operations at the previously mined Nkran pit, followed by mining of satellite deposits at Adubiaso, Abore and Asuadai. The process plant will be located near the Nkran deposit, where 80% of the reserves are located. Maximum haulage distance for ore from the satellite deposits will be 15 km.

Mining of the satellite deposits will be sequenced to optimize ore feed to the mill while maintaining throughput of 3 million mt/y. A mining contractor is proposed for earth moving activities. All deposits will be mined as open-pits, utilizing conventional truck and shovel methods.

Annual production of ore and waste will peak at 35 million mt/y, with a life-of-mine stripping ratio of 7.6:1. Approximately one year of waste stripping will be required at Nkran to expose sufficient ore to maintain a constant ore feed rate of 3 million mt/y.

The Obotan processing flowsheet includes single-stage jaw crushing, a SAG and ball mill in closed circuit with hydrocyclones, pebble crusher, a gravity circuit, and a single-stage pre-leach and seven-stage CIL circuit. The process plant design allows for 40% gravity recovery of gold. This recovery is similar to that achieved by Resolute during previous operations. The proposed process flowsheet is also similar to that employed by Resolute.

The PFS assumes spending for the construction of new administration buildings, temporary and permanent mine village facilities, a new 30-km 116-kV power line, and the rehabilitation and expansion of the existing borefield.

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