TSX-listed Endeavour Mining has started construction efforts for its Ity CIL project at its mine in Cote d'Ivoire following robust results from its optimisation study.The Ity CIL project feasibility and optimisation studies have been conducted by Endeavour Mining to analyse the economic viability of constructing a straight forward gravity circuit/carbon-in-leach (CIL) plant as an alternate processing route to the current heap leach process.
[quote]Following the publication of the November 2016 feasibility study (FS), an optimisation study (OS) was prepared to better capture the value created from the recent exploration success which has led to increasing the plant name-plate design from 3 Mtpa to 4 Mtpa.
In addition, several changes have been made to leverage construction and operating synergies between Ity, Agbaou and Houndé.
The study clearly positions Ity as our next flagship asset with robust project economics, a strong long-life production profile, and significant exploration upside," states Endeavour Mining president and CEO, Sébastien de Montessus.
"Its average annual production in the first five years of 235 koz with AISC below $500/oz and an after-tax IRR of +20% even at a low gold price of $1 000 per oz are proof of the compelling economics of the project.
"With the upcoming first gold pour at Houndé and Ity CIL construction expected to be completed within 20-months, we remain on track to achieve our strategic milestones of becoming a +800 000 oz per year gold producer with group AISC below $800 per oz and mine lives above 10 years by 2019," continues de Montessus.
"We have optimised the Ity CIL project by maximising the construction and operational synergies between Agbaou, Houndé and Ity, and by leveraging the same designs, components, equipment and spare parts where possible from one project to the other, along with incorporating our extensive construction expertise. The construction team is excited to transition from Houndé to Ity and to continue to build on its construction track-record," adds Endeavour Mining COO, Jeremy Langford.
Summary of key changes from the previous feasibility study
The Ity CIL project OS has been managed by Endeavour Mining's in-house development team and independently prepared by Lycopodium minerals with the support of six globally recognised engineering firms.
The key changes made in the OS include:
- CIL process plant increased from 3 Mtpa to 4 Mtpa to better capture the value created from the recent exploration success which has discovered the Bakatouo deposit and increased resources at notably Daapleu and Mont/Ity Flat
- Simplified and optimised the process plant design to maximise the replication of the Houndé design, where applicable, to capture working capital inventory synergies
- Improved recoveries based on additional metallurgical testwork, namely on the Daapleau primary material
- Addition of a diverter/flop-gate system which allows the ball mill to run independently during periods when the SAG mill is shut down. This operability allows the plant to maximise utilisation and effectively ensure process milling all year round
- Addition of a 26 MW full back up power station, identical to that installed at the Houndé project
- Optimised upfront capital cost and sequenced overall build time with a higher percentage of "self-perform" works
- Optimised the site layout, which allows the current heap leach operation to run independently of the CIL project. As such, the construction of the CIL project is not expected to impact the heap leach operation.
Reserves increased by 1 Moz - up by 53%
The updated mineral reserve estimates were undertaken by Snowden Mining and Technology consultants.
Changes from the previously reported mineral reserves are largely due to revised and updated mineral resource estimates on the Daapleu, Ity and Bakatouo deposits and revised operating costs largely associated with revised processing capabilities from a 3 Mtpa facility to a 4 Mtpa treatment facility.
Compared to the 2016 FS reserves, a total of 1 Moz were added, with the main increases coming from the discovery of Bakatouo (+532 koz), and additional resource to reserve conversion at Mont Ity/Ity Flat (+211 koz), Teckraie/Verse Ouest (+187 koz), and at Daapleu (+79 koz) following additional drilling.
The Colline Sud deposit is expected to be mined during the heap leach phase and therefore has been excluded from CIL mineral reserves.
Indicated Resources increased by 1.5 Moz
The updated indicated and inferred mineral resource estimates were undertaken by Cube Consulting, and incorporate all validated RC, DC and AC drilling completed at the Ity CIL project up to 1 May, 2017.
There is a total of 10 deposit areas included in the updated mineral resource for the Ity CIL project including four in situ gold deposits that have been or are currently in production, comprising Mont Ity, Ity Flat, ZiaNE and Walter, plus three near-mine in situ deposits comprising Gbeitouo, Daapleu, Colline Sud and Bakatouo, and two rock waste dumps at Teckraie and Verse Ouest and a discontinued heap leach pad Aires.
Compared to the resource inventory used to build the 2016 FS, a total of 1.5 Moz of indicated resources were added, with the main increases coming from the discovery of Bakatouo (+704 koz), and additional indicated resources outlined at Daapleu (+384 koz), Mont Ity / Ity Flat (+189 koz), and Verse Ouest (+187 koz).
Mining and Processing strategy
A number of schedules were completed to test the impact of limiting stockpile size and it was found that there was limited benefit to allowing for large stockpiles.
As such, the mining sequence and stockpile management has improved in the OS compared to the FS.
Whereas previously the mining period was nine years followed by the processing of stockpiled low-grade ore for another five years, the current mine plan is based on 12 years of mining followed by the processing of stockpiled low-grade ore for another 2 years.
A combination of strategic pit staging and stockpiling allows gold production to be brought forward, with about 1.2 Moz mined in the first 5 years from commissioning and 1.5 Moz in the last 10 years.
The overall grade profile declines gradually over the life of mine as higher grade deposits such as Bakatouo, Daapleu and Mont Ity / Flat are mined upfront.
The mine planning, resource and cost estimation for the FS is based on an owner-operated mining operation using 90-ton haul trucks and a maximum mining movement of 16 Mt per year with a vertical advance of approximately 40 m per year.
Endeavour Mining sees these figures as conservative in nature due to the annual rainfall at the Ity project.
Mining is scheduled to commence three months before the start of the processing plant to pre-strip the pits and stockpile ore.
The mining fleet contract has been awarded to Komatsu to benefit from synergies relating to minimising spare parts inventory and maintenance costs, as both Houndé and Karma have a similar fleet.
Following updated resource and reserve estimates, the key change to the design basis is an increase in throughput from 3 Mtpa feed to 4 Mtpa feed based on a blend of primary and oxide ore with a conventional primary crushing followed by SAG and ball milling circuit with recycle pebble crusher, gravity circuit and conventional CIL plant.
Soluble copper from the Bakatouo asset is blended with the low copper Daapleu ore into the plant process schedule until depletion of Bakatouo.
A maximum process plant feed limit of 200 ppm cyanide soluble copper constraint has been set, to manage cyanide consumption within the CIL plant and detoxification circuit.
The process plant will notably be composed of a single stage primary crushing to produce a crushed product size of 80% passing (P80 of 166 mm) and a two stage SAG (with pebble crusher recycle)/ball milling in closed circuit with hydro-cyclones to produce a P80 grind size of 75 micrometers.
A gravity concentrator and intensive leach reactor have been included in the design as per the FS.
The CIL circuit comprises eight CIL tanks (up from six in the FS) containing carbon for gold and silver adsorption with oxygen sparged from two 25 ton PSA oxygen plants and a 18 ton split Anglo elution circuit.
Electro-winning and induction furnace smelting completes the gold doré production process.
A cyanide detoxification and arsenic removal circuit is included in the process facility design, for treatment of process residue before discharge to the fully lined 57 Mt tailings storage facility (TSF), located adjacent to the processing facility.
Feed water for the processing facility will come from various sources such as pit de-watering bores, the Cavally River for (make-up) and decant return from the TSF.
The overall life of mine recovery rate increased from 83% in the FS to 86% in the OS due to the addition of high-recovery Bakatouo oxide and fresh ore, Mont Ity ore and better recovery on Daapleu Sulphides following additional testwork.
For the economic model, payable silver in the doré ingots has been estimated on a conservative ratio of 2 to 1.
A detailed investigation of the metallurgical response of the Bakatouo deposit was undertaken.
Most samples showed high gold extractions but soluble copper levels were also high, particularly in the transition ore.
As such, Endeavour Mining has elected to blend in the soluble copper ore constraining it to 200 ppm per feed blend.
The Daapleu Primary ore can be considered refractory, with elevated Arsenic levels in the fresh ore, however it has negligible copper.
Further detailed testwork has shown improvements, allowing the reported recovery for the higher arsenic fresh material to increase to from 60% in the FS to 66% in the OS.
Low operating costs
The operating cost estimates have been re-scoped based on most recent available cost information and based on a 4 Mtpa processing operation.
Operating costs have been based on a delivered diesel price of $1/l and are in line with current local pricing.
Following the connection to the grid, electricity costs have been estimated based on $0.1243/kWh.
Project CAPEX summary
The optimised and fully scoped upfront capital cost has been re-estimated to reflect the upgrade project scope at $412 million, inclusive of $49 million for the owner-mining fleet and $34 million for contingencies.
The upfront capital is expected to be $351 million as a $61 million lease financing is expected to be put in place for the mining fleet and power station.
Capital costs include the construction of a 58 km, 91 kv overhead power line, which connects to the national grid at Danane and terminates with a substation at Ity which will be owned by Côte d'Ivoire Energie.
A full 26 MW full high speed diesel back-up power station provides 100% redundancy.
The infrastructure in place will be improved with roads upgraded to an all-weather and free draining carriageway to provide access for the delivery of equipment, materials and services to the site.
A new camp will be built approximately 1 km north-west of the process plant and will provide accommodation for 200 employees, and provisions have been made to construct a suitable airstrip.
A Cavally River diversion will be installed to allow development of the Daapleu pit, with a second diversion upstream of the Walter pit.
Pit protection bunds will also be installed and a bridge/culvert road structure from Daapleu over the Cavally River will also be built.
The proposed approach to project implementation is similar in nature to the current execution methodology of the Endeavour Project Services in-house team in that Endeavour Mining will engage a suitably qualified engineering, procurement and construction management engineer for design and construction management of the process plant and infrastructure, which will then be handed over to an owner's operating team.
Endeavour Mining will self-perform the development of the mine infrastructure and provision of ongoing drill and blast and mine operating services under an owner's mine technical team.
The schedule anticipates the project being completed within 20 months from EPCM award.
The results of the financial model show robust results. Applying a long term gold price of $1,250/oz on a flat line basis from the commencement of production, the after-tax NPV 5% is $710 million, IRR is 40.3% and project payback period is 1.8 years.
The project is fully funded
The Ity CIL project is fully funded with significant headroom available based on liquidity and funding sources available which include cash and un-drawn up-sized revolving credit facility, the future cash generation from existing operating mines the upcoming proceeds from the sale of the Nzema mine, potential Ity power station and equipment financing, and the upcoming La Mancha anti-dilution equity placement.
As was successfully implemented during the Houndé construction period, Endeavour Mining will study the opportunity to put in place a short-term gold revenue protection strategy, consisting of gold option contracts on only a portion of its production, to mitigating risk and increase the certainty of its upcoming free cash flow during its peak investment phase.
Heap leach operation
It is envisaged that the heap leach operation will run during the construction period and that heap leach activities will cease once the CIL plant is commissioned.
Endeavour Mining will reassess the risk and opportunity of running both operations in parallel once the CIL project has been developed.
Community and social responsibility actions
Endeavour Mining recognises that an active CSR program is the foundation of long-term success and its social license to operate.
Baseline studies for the ESIA from 2013 to 2016 have been completed and an ESIA report was published in March 2016 and a resettlement action plan has been completed.
Three environmental permits have been granted covering the mining and process plant, Daapleu and Gbeitouo exploitation and mining and surface infrastructure.
Full CSR team complement is now in place and working on establishing CSR best practices and reporting.
The Ity area has significant exploration potential with several deposits located within 5 km of one another in addition to several exploration targets .
This area represents a small portion of the 80 km corridor controlled by Endeavour Mining.
Feature image credit: Wikimedia