HomeGoldRobust economics revealed for potential JV gold heap leaching project in Mali

Robust economics revealed for potential JV gold heap leaching project in Mali

Mali – Alecto Minerals and Desert Gold Ventures have completed a joint internal scoping study which highlights the robust economics associated with developing a potential 400 000 tpa, low-cost gold heap leaching operation combining Alecto’s Kossanto East gold project and Desert Gold’s Farabantourou gold project.

The scoping study is based on the known gold deposits on the respective permits, namely the JORC compliant Gourbassi East (GBRE) and Gourbassi West (GBRW) within Alecto’s Farikounda gold permit which contains the Kossanto East gold project and Barani East (NI 43-101) within Desert Gold’s Farabantourou gold permit.

Location of the proposed Alecto-Desert Gold mining Joint Venture
Location of the proposed Alecto-Desert Gold mining Joint Venture

It demonstrates that significant cost savings can be generated by jointly developing these deposits through heap leaching with a shared mining fleet and mobile crusher with a central gold recovery plant.

Highlights: Low capital and operating costs for scalable near term gold production

  • Scoping study suggests that an annual production rate of approximately 27 000 oz gold would generate approximately US$97.5 million in gross revenue over an estimated life of mine of just over three years.
  • Estimated low cash costs of approximately $582/oz gold over the initial life of mine.
  • Low total capital expenditure of approximately $14.3 million with payback anticipated within 12 months of initial production.
  • Project NPV (10% discount rate) of $27.4 million with an IRR of 107% at a gold price of $1 200 per troy ounce.
  • Potential to extend the life of mine through further exploration of the permits to be funded from project cash flows.
  • Combined, Farabantourou and Kossanto East have a total estimated resource of over 365 000 oz gold (at a 0.5g/t cut-off) – both projects fall within a potential 10 km trucking radius from a central location.
  • This project is subject to the completion of a mining joint venture agreement between the two parties.

“Through our collaboration with Desert Gold established in March we have been able to demonstrate the potential for the joint development of Farabantourou and Kossanto East in line with our stated strategy of becoming a gold producer in the near to mid-term,” says Alecto CEO Mark Jones.

“We look forward to progressing this exciting opportunity through the creation of a joint venture company that will see the Farikounda and Farabantourou permits combined prior to making a single application for a mining licence across the two permits to the Ministry of Mines in Mali.  It is our belief that the combined venture, with its positive economics and clear path to gold production will provide much needed economic growth in Mali where we maintain an excellent relationship with the Ministry of Mines.”

Mining and processing

The Scoping study, prepared jointly by Alecto and Desert Gold, considered various scenarios involving the development of two heap leach pads with a capacity at each for 200 000 tpa, with one heap located between the two deposits on Kossanto East, servicing GRBE and GRBW.

The other would be located on Farabantourou and servicing Barani East, with additional resources in proximity to these locations.

It is proposed that an owner-operated mining fleet will selectively mine the deposits and deliver ore to the respective heap leach pads.  A mobile unit will then move between the two heap leach pads undertaking primary crushing followed by agglomeration, with the ore then stacked using conveyors and a rotary stacker before carbon adsorption, which will take place adjacent to each heap, followed by desorption, recovery, electro winning, carbon regeneration and gold recovery, which will be completed in a central gold recovery plant.

The preferred scenario selected on the basis of the scoping study involves selectively mining high-grade ore using a fixed cut-off of 1 g/t, to deliver ROM material to each heap leach pad with a head grade of 2.1 g/t.

Based on current data, gold recoveries of 80% are anticipated with the mine estimated to produce up to 27 000 ozpa of gold, thereby providing for a pre-production capital payback within 12 months and robust cash flows for the two companies.

Low grade ore (<1 g/t) will be stockpiled for potential future treatment at the end of the life of mine, though returns from this ore processing have not been considered in the current financial model.  There is also the potential to extend the life of mine through further exploration of other known gold occurrences within the permits funded from project cash flows.

As part of the Scoping study, Wardell Armstrong International (WAI) was commissioned to complete a high-level study and run pit optimisations based on the existing mineralised ore block models for each of the deposits.

The study parameters included only the resource blocks that fell within an open pit with maximum pit depth of 60 m, representing a small proportion of the known ore bodies.

The results from WAI’s study of confining the ore bodies as per the above parameters and applying the pit optimisations, which feed into the scoping study, demonstrated the potential for an economical mineable resource of 1 205 542 t at a grade of 2.1 g/t with a stripping ratio of 5.8 : 1.

Next steps

As a result of the positive economics highlighted in the scoping study, Alecto and Desert Gold will now seek to formalise the terms of a mining joint venture company for the joint development of the deposits and proceed, subject to successful completion of negotiations, with an application for a mining licence covering the two permits.

A comprehensive programme of work will focus on metallurgical and geotechnical aspects of the deposits, which will allow a detailed feasibility study to be completed in order to bring, subject to, inter alia, financing, the projects into production as soon as possible.

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