Manas Resources delivers significant intersection of 54m at 2.9g/t gold from Shambesai

Manas Resources (ASX: MSR) continues to unlock the significant potential of the Shambesai Gold Project in the Central Asian country of the Kyrgyz Republic.

The latest positive news flow surrounds the company intersecting a significant mineralised zone from the final three diamond holes of the 2011 drilling program.

Manas discovered an 87 metre long mineralised zone which the company said demonstrates how the deep zone on the Shambesai western extensions along the mineralised limestone contact can swell to very wide thicknesses at depth.

The highlight is a broad intersection of 54 metres at 2.9 grams per tonne (g/t) gold from 233 metres, which included the high grade zone of 8 metres at 4.82g/t gold.

Mineralisation continued to be intersected further down this hole, which included 19 metres at 1.1g/t gold from 301 metres.

The significance of discovering the mineralised zone is that it provides immediate follow up drill targets.

The results though for the final three holes will not be included in the resource update expected out later this month, which remains on schedule, due to being completed after the planned 2011 program was completed.

Exploration continues at speed, with three rigs currently operating at Obdilla, two rigs at Ulugtau and two rigs are being mobilised to Tashbulak.
Manas is the largest and most active gold explorer in the Kyrgyz Republic with projects located in the south of the country - and holds an extensive 4,400 square kilometre land holding.

The company is moving towards the development of a low cost gold leach project.


Resource update later this month

Manas is currently working on a resource update for Shambesai which is expected to significantly increase the current resource of 645,000 gold ounces.

In total, the company has a resource of 1,130,000 gold ounces at the Shambesai and Obdilla prospects, which are located just seven kilometres apart.

The new resource will then be incorporated in an updated pit optimisation, using updated costs and gold price from the Feasibility Study work.


Low costs for processing oxide ores

Given the expected very low costs for processing oxide ores by heap leach methods, the updated resource for Shambesai will target lower grade oxide zones that will significantly increase the available material for the pit optimisation.

Manas said that work is also continuing on developing a viable sulphide ore processing route to target deeper high grade sulphide zones.

This work is expected to result in additional production ounces and increased cash flows from the current high grade oxide resource, which the company’s November 2010 study estimated could return cash flows of US$118 million at a US$1,000 gold price.

The Feasibility Study remains on schedule for release in the December 2011 Quarter.

Compelling valuation economics

The key valuation parameters of Shambesai provide a compelling story.

With a project internal rate of return of 201%, on a gold price of US$1000 per ounce, well below the current spot of over US$1800 indicates the potential profitability and return on funds invested in the project for Manas.

Annual gold production at Shambesai is forecast at 35,000 ounces for the first three years, for an average of 30,000 ounces over six years, with a payback period of just nine months.

The average operating cost is US$180 for the first three years, with the initial capital cost to production just $16.3 million.

Some major investors have significant holdings in Manas, with Macquarie Bank (ASX: MQG) and Lion Group holding 15 million shares each, with Macquarie increasing its stake earlier in the year.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19859/manas-resources-delivers-significant-intersection-of-54m-at-29gt-gold-from-shambesai-19859.html