Hummingbird Resources, the gold development junior, has announced the final results of a 14 month hydro-electric power (HEP) PFS near its 4.2 Moz Dugbe gold project.

Liberia – The PFS, which was funded by IFC InfraVentures and carried out by Knight Piésold, confirms the potential viability of a range of options for HEP plants with the ability to supply a sustainable source of power for Dugbe, as well as the south-east Liberian region.

Importantly, the HEP plant also offers the potential to reduce the all in sustaining costs (AISC) for Hummingbird Resources’ Dugbe as well.

The study highlights five alternative solutions from 10 – 30 MW of hydro-electric power, with capital expenditures ranging from US$51.5 – $143.5 million depending on size. Most importantly, it offers a hydro-electric power solution for the Dugbe gold project, with potentially materially positive cost and environmental benefits.

“As the largest gold deposit in Liberia, with a $186 million NPV at a $1 300 gold price, we are obviously keen to move the project forward towards development and the delivery of the hydro power PFS is a tangible deliverable in this process,” says Hummingbird Resources CEO Dan Betts.

“Power costs make up over a third of our total process opex at Dugbe and finding savings in this area will have positive implications to the project’s economics.  We had been using an estimate of $0.28c/kW for rented diesel power in the PFS.”

Taking the total capex and opex for the HEP plant, over the current 20 year mine life, gives you a theoretical cost of $0.05c/kWh.  This number does not compare directly, since it does not include the impact of the financing cost of building the hydro plant as it is not yet known how this will be done or by whom.

“However, assuming a suitable financing solution was found, this could have a materially positive impact on the economics of Dugbe.  Therefore, we are now considering our next steps with our partners on the PFS.”

HEP background

In Q2, 2015 a collaboration agreement was signed for the funding and development of a hydro-electric power plant approximately 10 km from Hummingbird Resources’ 4.2 Moz Dugbe gold project.

The collaboration agreement was signed between Hummingbird Resources and IFC InfraVentures, the IFC Global Infrastructure Project Development Fund, and Aldwych International, an energy company active in the growing economies of Africa.

Knight Piésold (Vancouver), an engineering and consulting company, recently completed its fifth and final scheduled site visit in order to assess and take readings from the run-of-river flow rate monitors that were set up at the start of the 12 month monitoring programme.

Spreading the capital and operating cost for each option, over 20 years, the cost of a unit of power is between $0.05 – $0.06c/kWh.  However, this does not include the cost of the debt and equity required to finance the building of the plant, which will add to the figure.

By comparison, the current power plan is based on a rented diesel power estimate of approximately $0.28/kW and was calculated when world oil prices were significantly higher than they are currently.  Of the $903/oz AISC in the company’s 2013 scoping study, in excess of 30% is the cost of rented diesel power.

There is also precedent for the potential reduction of capital costs by changing the canal from a concrete lined structure to an earth lined canal with larger cross sectional area and flatter side slopes.

Depending on geotechnical conditions, unlined earth canals could be a viable option that could result in significant cost savings, but they will likely require more annual maintenance, adding to the operational costs.