CONSTRUCTION is underway at Endeavour Mining’s 85 per cent-owned Agbaou gold project in the Ivory Coast, and the project is now on schedule for first production in early 2014.
The $159 million project is expected to average production of 103,000 ounces of gold per annum across an initial eight year mine life, at cash costs of $635 per ounce.
Endeavour already owns two gold mines in Ghana and Burkina Faso, which produce about 180,000 ounces per annum, generating significant operating cash flows to fund exploration and development growth. Agbaou, which lies 200km north-west of the port city of Abidjan, is Endeavour’s most advanced property in the Ivory Coast.
Approval for construction to begin at Agbaou was granted after Endeavour undertook optimisation of a feasibility study that was completed in 2009. The company also completed an updated compliant technical report that incorporated updated mineral resources and reserves, and capital and operating costs.
Endeavour chief executive officer Neil Woodyer described Agbaou as “a robust project with attractive economics” and said that construction of the project could begin immediately following approval due
to the company’s financial strength and operating cash flow.
“Our engineering optimisations include a 12 per cent increase in plant capacity when processing bedrock ore and an updated mineral resource estimate which increased the proven and probable reserve
grade by 21 per cent to 2.5 grams per tonne and contained ounces to 905,000,” Mr Woodyer said.
The project’s updated measured and indicated resources total is 1.157 million ounces comprised of 14.970 million tonnes at 2.43 g/t of gold.
At an average gold price of $1625 per ounce, Endeavour estimated that the project had a net present value (NPV) of $549 million and internal rate of return (IRR) of 48 per cent.
At a slightly lower gold price of $1250, the company stated that the NPV was $274 million, with an IRR of 28 per cent.
Having already completed an extensive drilling program at Agbaou, Endeavour has reported that this year it will spend $6 million on exploration at a further eight targets with the hope of increasing the project’s resources and reserves.
“We believe Agbaou has significant upside potential beyond what is included in the technical report,” Mr Woodyer said.
Of the project’s $159 million funding requirement, $121.2 million will be used for construction of the open pit mine and processing plant, while Endeavour has reported that $37.7 million will be needed
for “upfront costs”.
The Agbaou processing plant is designed to treat 1.6mtpa of saprolite ore or 1.34mtpa of bedrock ore. Endeavour has already selected Lycopodium Minerals as Agbaou’s engineering, procurement and
construction manager and has begun purchasing long-lead items for the project