TSX- and ASX-listed Endeavour Mining’s Houndé gold project in the south-western region of Burkina Faso, in West Africa, increased its mineral reserves by 34%, or 523 000 oz, to 2.1 Moz, increasing potential production, extending mine life and further strengthening overall project economics, the company announced in a statement last week.
The increase in reserves is due to the expansion of the Vindaloo deposit and inclusion of two new deposits within 14 km of the proposed plant site.
The Canada-based miner reports that drilling on the Vindaloo West and Vindaloo Main zone targeted inferred resource blocks and was successful in confirming mineralisation. The upgrading of inferred mineral resources not only provided additions to mineral reserves but also reduced strip ratios in the Vindaloo Main zone.
The first of two new deposits, Bouéré, is located 12 km west of the Houndé process plant site. The drilling program was successful in extending the mineralisation over a 600 m strike length with widths of mineralisation varying from 2 m to 25 m and generally dipping 80° to the northwest.
The second deposit, Dohoun, is located about 14 km northwest of the Houndé process plant site. The drill program aimed at improving confidence in grade and continuity to enable resource estimation. The Dohoun mineralisation is 500 m along strike and dips steeply northwest in the main ore zone.
Endeavour CEO Neil Woodyer comments: “We invested US$6.7-million in the Houndé program during 2014 while we progressed through the mine permitting phase. This has resulted in a 523 000 oz addition to proven and probable reserves, or a 34% increase, for a cost of approximately $13 per discovered reserve ounce.”
He goes on to say that the reserve additions have enhanced the after-tax project IRR to between 28% and 35%, with a gold price range of $1,200 to $1,300/oz. At a $1,250/oz gold price the 5% NPV is $359-million.
The plan for Houndé going forward
Since receiving the mining permit for Houndé on February 5, 2015, Endeavour’s construction services team, which recently completed the construction of the Agbaou mine ahead of schedule and under budget, has been preparing the Houndé Project for a construction decision.
Australia-based EPCM consultancy Lycopodium has estimated the upfront capital cost to be $325-million and have completed a detailed construction plan.
Woodyer says that Endeavour are now focusing on refining the Houndé operations plan, which now includes the updated mine plan with the 2014 exploration additions.
“We are also reviewing operating costs in the context of reduced energy costs and the benefits of local currency rate devaluation. The strong project economics across a range of gold price assumptions highlights the significant value of Houndé to Endeavour shareholders,” he added.
Other Africa-based mines
Meanwhile, Endeavour also announced that both the Agbaou mine, in Côte d’Ivoire, and the Mali-based Tabakoto mine, experienced a net gain in reserves when compared to the end of 2013 demonstrating the potential for steady replacement of mined ounces.
At the Agbaou and Tabakoto mines, $2.1-million and $9.2-million was spent, respectively, leading to a cost of approximately $33 per discovered reserve ounce.
At Agbaou, the reserve gains are almost exclusively oxides added as a result of the drill program that was reported in October 2014. At Tabakoto, the ongoing underground exploration initiatives and continued drilling below development is successfully converting Inferred resources to Measured and Indicated and, ultimately, into reserves.