Welcome!

News Feed Item

Golden Queen provides a construction update and updates its capital cost estimates

New Total Capital Expenditure Estimate of $141 Million Including $7 Million Spent to Date

VANCOUVER, March 27, 2014 /PRNewswire/ - Golden Queen Mining Co.  Ltd.  (TSX:GQM) (OTCQX:GQMNF) (the "Company") is pleased to provide an update on the construction underway on its Soledad Mountain Project (the "Project") and its expected capital costs for the construction of the Project. (Amounts are shown in U.S. dollars).

Costs incurred on construction of the Project since July 2013 to date, including access roads and site preparation are largely in-line with the feasibility study cost estimates provided in a news release dated October 25, 2012; a copy of which is available on the Company's website and on SEDAR.

One of the Company's priorities in Q4 2013 and Q1 2014 has been to complete detailed engineering designs for construction and update cost estimates for the major turn-key projects. The feasibility study capital cost estimates were prepared in 2012 and were therefore out of date by around 18 months by the end of 2013. These detailed designs are either well under way or have essentially been completed, and the Company has now received updated cost estimates for all of the turn-key projects.

The typical increase in cost estimates for the turn-key projects is mostly a result of design changes from the feasibility study.  "The time between the feasibility study and the start of construction has provided us with the opportunity to re-evaluate the designs and we have made a number of improvements which we believe will enhance the efficiency and reliability of the processing operation" said H. Lutz Klingmann, President.

Workshop-Warehouse: The Company received a proposal for the construction of the workshop-warehouse from a local contractor in late-2013.  This was the first of the turn-key projects and the contract price was in line with the feasibility study cost estimate.

Crushing-Screening Plant: The contractor has just completed the design for the crushing-screening plant as a turn-key project with numerous adjustments to the feasibility-level design, to improve the operability of the plant both from an operating and a maintenance point of view.  The plant now includes an agglomeration drum and provision has been made for a possible future increase in plant throughput and this has added to the cost of the plant.

Stacking and Conveying System: The feasibility study employed a stacking and conveying system design completed in 2005. The current design has evolved substantially over the past year to a fully-automated system with a significant increase in the reliability of the overall system.  Especially the power distribution along the system has evolved with a separate transformer and motor control package for each unit of the system.  Each of the grass hopper conveyors now includes dust control covers over the conveyors and all functions of the stacker are now controlled by radio remote control.

Phase 1 Heap Leach Pad: The Phase 1 heap leach pad has been designed as a permanent, single-use pad with external solution collection and management systems.  Crushed and agglomerated ore will be conveyed to the heap and stacked with a radial stacker.  The Company has received an updated cost estimate for the construction of the Phase 1, Stage 1 pad and this, after allowance for the construction of the overland conveyor system and peripheral roads in 2013, is lower than the feasibility study cost estimate.

Merrill-Crowe Plant: The current design includes an increase in solution flow rates of 50% decided upon as part of an overall design review for the Project.  The increase in solution flow rates has been accommodated in the original Merrill-Crowe plant footprint. Costs are elevated due to an increase in the size of the equipment in the plant.

Assay Laboratory: The assay laboratory has been changed from a laboratory assembled from three pre-fabricated modules to a laboratory constructed on site.

Water Supply (Supply from Production Wells & Distribution): Both the design and the cost estimates for the water supply from two production wells were re-done from first principles by a consulting engineering firm based in Bakersfield.  The design for the feasibility study was inadequate and this was reflected in a cost estimate that was significantly lower than the current cost estimate.

The construction period will also be longer than the 12 months assumed in the feasibility study. As a result, the Company increased its EPCM (engineering, procurement and construction management), pre-production overhead and general site support cost estimates.

The key cost increases from the feasibility study estimates are shown in the table below:

   
Turn-Key Project Cost Increase from
2012 Feasibility Study
Workshop-Warehouse $0.1 million
Crushing-Screening Plant $2.7 million
Stacking and Conveying System $3.9 million
Phase 1 / Stage 1 Heap Leach Pad ($1.0 million)
Merrill-Crowe Plant $1.8 million
Assay Laboratory $0.4 million
Water Supply (Supply from Production Wells & Distribution) $2.3 million
Total Impact of Turn-Key Projects Revised Cost Estimates $10.2 million

Approximately 50% of capital expenditures are comprised of turn-key projects that will be awarded as fixed-price contracts. These contracts will therefore provide price protection during the construction period. The Company has selected and is working with contractors with significant experience and excellent reputations.

The updated designs and other cost updates have raised the total estimated capital cost to build the Project to $114 million. This includes a contingency of 15% of estimated construction costs, or approximately $15 million. The 2012 feasibility study had a cost estimate of $79 million and unallocated costs of $12 million for a total of $91 million.

In addition to the construction capital expenditures, the Company anticipates to require $10.5 million for working capital and approximately $17 million for mobile mining equipment. These estimates have not changed from the feasibility study. The Company's new estimate for the total capital required to bring the Project to production is $141 million (from $119 million in the feasibility study), of which $7 million has been spent to date.

CONSTRUCTION UPDATE

Phase 1 Construction

Work on the Phase 1 earthmoving projects was essentially completed in December 2013 with some final touch-up completed in January 2014. This included the pad where the workshop-warehouse is being constructed, the interconnecting roads including the main haul road between the area where the crushing-screening plant will be constructed and the east waste rock storage pad and the construction of safety berms as required by MSHA.

The Company awarded a contract for the construction of the workshop-warehouse and wash slab to a local contractor in late-2013.  A key milestone was achieved when the prepared pad was formally handed over to the contractor in mid-January to commence construction of the footings as illustrated in Photograph 1.

In addition, the Company has awarded contracts for the construction of the Phase 1 water supply and a guard shack and gate.

Phase 2 Construction

Phase 2 construction has commenced and will continue concurrently with the ongoing Phase 1 construction.

The Company anticipates completion of site preparation where the crushing-screening plant and the assay laboratory will be constructed in April.

The Company has awarded contracts for the construction of the septic system and leach field and a fuel storage facility.

A second key turn-key project is the assay laboratory.  Detailed designs have been completed and it is expected that a contract for the procurement and construction of the assay laboratory will be awarded in Q2 2014.

About Golden Queen Mining Co. Ltd.

The Company is developing its wholly-owned, gold-silver, open pit, heap leach operation on its fully-permitted Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California. The Project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore.

H. Lutz Klingmann, P.Eng., the President of the Company, is a qualified person for the purposes of National Instrument 43-101 and has reviewed and approved the technical content of this press release.

Caution With Respect To Forward-looking Statements

The information in this news release includes certain "forward-looking statements".  All statements in this news release, other than statements of historical fact, including, without limitation, plans for and intentions with respect to construction and other development activities on the Soledad Mountain Project, capital cost estimates, and future mining operations on the Project, are forward-looking statements. There can be no assurance that such statements will prove to be accurate, and actual capital costs, results of our development plans, and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from statements in this news release regarding our intentions include the uncertainties involving the availability of project financing in the debt and capital markets; changes in capital cost estimates or actual costs due to delays in construction or for other reasons, risks of construction and mining such as accidents, equipment breakdowns, non-compliance with environmental and permit requirements, and other risks and uncertainties disclosed in the section entitled "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2013.  Investors are cautioned that forward-looking statements are not guarantees of future performance and, accordingly, should not to put undue reliance on forward-looking statements.  Any forward-looking statement made by us in this release is based only on information currently available to us and speaks only as of the date on which it is made. 

SOURCE Golden Queen Mining Co. Ltd.

Image with caption: "Photograph 1 - Concrete pouring near completion at warehouse area (CNW Group/Golden Queen Mining Co. Ltd.)". Image available at: http://photos.newswire.ca/images/download/20140327_C7543_PHOTO_EN_38442.jpg

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Redis is not only the fastest database, but it has become the most popular among the new wave of applications running in containers. Redis speeds up just about every data interaction between your users or operational systems. In his session at 18th Cloud Expo, Dave Nielsen, Developer Relations at Redis Labs, shared the functions and data structures used to solve everyday use cases that are driving Redis' popularity.
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, will share examples from a wide range of industries – includin...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Phil Hombledal, Solution Architect at CollabNet, discussed how customers are able to achieve a level of transparency that e...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Much of the value of DevOps comes from a (renewed) focus on measurement, sharing, and continuous feedback loops. In increasingly complex DevOps workflows and environments, and especially in larger, regulated, or more crystallized organizations, these core concepts become even more critical. In his session at @DevOpsSummit at 18th Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, showed how, by focusing on 'metrics that matter,' you can provide objective, transparent, and meaningful f...
"We are the public cloud providers. We are currently providing 50% of the resources they need for doing e-commerce business in China and we are hosting about 60% of mobile gaming in China," explained Yi Zheng, CPO and VP of Engineering at CDS Global Cloud, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at 20th Cloud Expo, Ed Featherston, director/senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Between 2005 and 2020, data volumes will grow by a factor of 300 – enough data to stack CDs from the earth to the moon 162 times. This has come to be known as the ‘big data’ phenomenon. Unfortunately, traditional approaches to handling, storing and analyzing data aren’t adequate at this scale: they’re too costly, slow and physically cumbersome to keep up. Fortunately, in response a new breed of technology has emerged that is cheaper, faster and more scalable. Yet, in meeting these new needs they...
"Once customers get a year into their IoT deployments, they start to realize that they may have been shortsighted in the ways they built out their deployment and the key thing I see a lot of people looking at is - how can I take equipment data, pull it back in an IoT solution and show it in a dashboard," stated Dave McCarthy, Director of Products at Bsquare Corporation, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
@DevOpsSummit taking place June 6-8, 2017 at Javits Center, New York City, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @DevOpsSummit at Cloud Expo New York Call for Papers is now open.
IoT is rapidly changing the way enterprises are using data to improve business decision-making. In order to derive business value, organizations must unlock insights from the data gathered and then act on these. In their session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, and Peter Shashkin, Head of Development Department at EastBanc Technologies, discussed how one organization leveraged IoT, cloud technology and data analysis to improve customer experiences and effici...
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...