VANCOUVER — U.K.-based producer Amara Mining (LSE: AMA, US-OTC: CLUGF) looks to have a great West African story on its hands at its brownfield Yaoure gold property, 40 km northwest of the Côte d’Ivoire capital of Yamoussoukro. Fresh off an updated resource in early January — which cemented Yaoure as the largest gold resource in the country — Amara revealed the results of a preliminary economic assessment (PEA) on the project that returns intriguing financials at competitive gold prices.
Yaoure’s geology consists of Birimian metavolcanic greenstones, which have been intruded by a suite of small, mainly granodioritic bodies. The project’s syntectonic gold mineralization is associated with shear zones, injected by quartz veins and stockworks.
Yaoure’s current pit would host 18.5 million indicated tonnes grading 1.22 grams gold for 723,000 oz., and 75.3 million inferred tonnes averaging 1.45 grams gold for 3.5 million contained oz. Amara’s optimized shell assumes a US$950 per oz. gold price and 0.5-gram-gold-per-tonne cut-off grade.
This accounts for 66% of Yaoure’s global resources, which total 20.3 million indicated tonnes grading 1.20 grams gold for 780,000 contained oz., and 133 million inferred tonnes grading 1.29 grams gold for 5.52 million contained oz.
Under PEA parameters the project would be developed and mined as a single open pit, comprising the CMA and Yaoure Central deposits. The operation would mine 95 million tonnes of oxide and sulphide material at a head grade of 1.39 grams gold, and recover 4.2 million oz.
The strip ratio is pegged at 5.2 to 1, which Amara explains is “relatively low due to the shallow-dipping nature of the mineralized zones.” The company predicts it could further decrease waste with more drilling to eliminate “information gaps” in the resource shell.
Amara’s PEA models an 8-million-tonne-per-year operation that would produce an average 325,000 oz. gold annually over a 12-year life. The company classifies its metallurgy as “simple and non-refractory,” with its plant designed to process Yaoure’s sulphides at a 95% recovery rate using conventional whole-ore leach methods in a carbon-in-pulp (CIP) circuit.
“Yaoure has the strongest production profile of any West African development-stage gold project,” commented executive chairman John McGloin during a conference call. “It is the largest project currently at the feasibility stage, and will produce more gold, over a longer period, than any of its peers . . . it also remains robust with solid returns at low gold prices, which is an important facet in the current volatile gold market.”
Yaoure’s upfront development cost would come in at US$274 million, with another US$92 million needed for an owner-operated mining fleet. Amara’s PEA demonstrates a 32% internal rate of return (IRR), along with a US$688-million after-tax net present value (NPV) at an 8% discount rate, assuming a US$1,250 per oz. gold price. Payback on initial capital is estimated at 2.4 years. Assuming a US$1,100 per oz. gold price, Yaoure returns a 23% IRR and US$406-million NPV.
Yaoure is 5 km away from a 150-megawatt power station, which helps keep operating costs low. Total cash costs, including royalties, are pegged at US$655 per oz. over the mine’s life, with energy costs at 9¢ per kilowatt hour and strong recoveries contributing to affordable operating metrics.
“There is excellent infrastructure in the area. The project is basically at the end of a highway that links Yamoussoukro with Abidjan,” McGloin pointed out. “There’s abundant water, good accommodation and perhaps most importantly, an educated workforce. We have the country’s mining university right on our doorstep.”
Yaoure also has a mining licence and environmental permits in place, which would help Amara expedite its development timeline.
The company intends to focus on development opportunities that could offer the project further flexibility. Both a 5-million-tonne-per year and 6.5-million-tonne-per-year scenario are under consideration, as well as smaller-scale oxide heap-leach models that could lead to lower capital expenditures, or a staged build-out strategy.
“I think there’s strong potential to lower the upfront capital requirement through staged development or selective mining that would require a smaller processing plant.” McGloin said. “As we move through our infill drill program, we’ll look at that potential to lift the grade and use selective — instead of bulk — mining.”
Amara’s stock jumped 15% in London after news of Yaoure’s PEA, before closing at 16.5 pence at press time. The company has traded within a 52-week window of 8.8 pence and 40 pence, and maintains 220 million shares outstanding for a US$50-million market capitalization.
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