Kagara Ltd. has received a positive prefeasibility for its Admiral Bay lead-zinc-silver project in the Kimberley region of Western Australia and is planning to follow up with a feasibility study that will cost an estimated A$184.5 million. A 6.7-m-dia exploration shaft will be sunk to a depth of 1,428 m as part of the feasibility study. Kagara expects to complete funding arrangements for the study within six months, including a possible joint-venture to allow the project to move ahead as rapidly as possible while retaining significant ownership for Kagara.

The Admiral Bay prefeasibility study, completed by RSV Australia, was based on inferred resources totaling 72 million mt and grading 3.1% zinc, 2.9% lead, and 18 g/mt silver, calculated at a 3% zinc equivalent cutoff. The exploration shaft will allow drilling out of these resources to reserve status along a 2.1-km section of the deposit to support financial modeling for project development.

The prefeasibility study estimates pre-production capital to develop the Admiral Bay project at A$812.2 million, excluding the cost of the feasibility study. The prefeasibility study indicates capital payback in less than four years based on a 2.5-million-mt/y underground operation having an initial mine life of 10.2 years. Production over that time frame is projected at 1.552 million mt of lead concentrate grading 70% lead, 1.539 million mt of zinc concentrate grading 55% zinc, and 18.97 million oz of silver contained in both concentrates. Initial production is currently being planned to begin in 2018.

A number of factors including increased production rates, use of geothermal power, and utilization of continuous mining equipment, all of which have the potential for significant cost reductions, will be investigated during the feasibility study.