November 06, 2013
Endeavour Mining Announces Positive Feasibility Study For Hound� Gold Project In Burkina Faso
November 6, 2013 - Endeavour Mining Corporation ("Endeavour") (TSX:EDV, ASX:EVR, OTCQX:EDVMF) announces the results of a positive NI 43-101 compliant Feasibility Study ("FS") of its Hound� Gold Project, an open pit gold mine with an initial life of mine ("LOM") of over 8 years. The FS will be presented to the government of Burkina Faso as part of the on-going permitting process.
(All amounts in US dollars unless otherwise indicated)
Hound� FS Highlights, on a 100% basis, include:
- Average annual production of 178,000 gold ozs per year over an 8.1 year LOM, with total LOM production of 1.44 million ozs.
- An average gold recovery of 93.3% via a SAG/ball mill (SABC) grinding circuit followed by gravity/CIL plant capable of treating 3.0 million tonnes per annum (Mtpa) of ore (nameplate capacity: 9,000 tpd).
- Owner operated open pit mining and Proven and Probable reserve of 25 million tonnes with an average grade of 1.95 g/t Au.
- Initial start-up capital of $315 million (including working capital, import duties, and contingency). LOM sustaining capital of $62 million, and $26 million of rehabilitation and closure costs.
- Forecast LOM direct cash cost of $636/oz (excluding royalties) and all-in sustaining cost of $775/oz (including royalties and rehabilitation and closure).
- The project yields, on an after-tax basis:
|
|
|
At $1,300/oz
Gold Price
(Base Case) |
At $1,500/oz
Gold Price
(Sensitivity) |
|
NPV 0% |
$ million |
$364 |
$593 |
|
NPV 5% |
$ million |
$230 |
$408 |
|
IRR |
% |
22.4% |
33.4% |
Neil Woodyer, CEO, stated
"Hound� is a strong gold project with potential to produce approximately 180,000 ozs per year at an all-in sustaining cost of under $800 per ounce. At a $1,300 gold price, Hound� has an attractive after-tax IRR of 22% illustrating strong cash flow generation. The project also benefits from excellent infrastructure, our current Agbaou mine building expertise, and our Burkina Faso operating experience at Youga. While work continues on obtaining the Hound� mining permit, we are evaluating how best to integrate Hound� into Endeavour's production growth plans."
Management Conference Calls - November 13 and 14, 2013
Endeavour's Management previously scheduled two conference calls to discuss the Q3/2013 operating and financial results on November 13 and 14, 2013. During these calls, Management will also discuss highlights from the Hound� FS. Details for the conference calls can be found in a news release on November 4, 2013.
Hound� Project Ownership
Endeavour, through its 100% owned subsidiary Avion Gold (Burkina Faso) SARL, has a 100% interest in the approximately 1,000 square kilometre Hound� Gold Project, situated in the South-western region of Burkina Faso (see Figure 1). Ownership upon achieving production will be 90% by Endeavour and 10% by the government of Burkina Faso. All current mineral resources on the Hound� property lie within the Kari Nord and Kari Sud concessions and are subject to a Transfer and Claw-Back Option Agreement with African Barrick Gold plc ("African Barrick"). The FS resources of 1.87 million ounces of Measured and Indicated and 0.13 million ounces of Inferred (see Table 1) are less than 3 million ounces, therefore African Barrick does not have claw-back rights but retains a 2% NSR. This royalty has been included in the FS financial analysis.
Figure 1: Hound� Project Location Map, including Endeavour's Youga Gold Mine 
Hound� FS Summary
The Hound� Project FS focuses on the Vindaloo group of deposits that are located approximately 250 km South-west of Ouagadougou, the capital city of Burkina Faso. The deposits are approximately 2.7 km from a paved highway and as close as 200 metres from a 225 kV power line that extends from C�te d'Ivoire through to Ouagadougou (see Figure 2). The nearby town of Hound� has a population of approximately 22,000. A rail line that extends to the port of Abidjan, C�te d'Ivoire lies approximately 25 km west of the deposit area.
Lycopodium Minerals Pty Ltd. was the FS study lead consultant with a focus on study coordination, metallurgy, infrastructure design and process plant design. Cube Consulting completed an updated Mineral Resource estimate. Knight Pi�sold Pty. Ltd. carried out pit and site geotechnical reviews, completed a water balance study and designed the tailings storage facility, water harvest dam and the water storage dam along with mine site drainage control elements. Orelogy Group Pty Ltd completed the mine plan and Mineral Reserve.
Mine environmental and social impact assessments ("ESIA") were completed under the lead of Genivar Inc. with SOCREGE and INGRID collecting social and environmental data, respectively. INGRID also completed an additional environmental and social study on the project's water supply. Knight Pi�sold provided high level oversight over all of these studies.
Copies of the FS and ESIA will be presented to the government of Burkina Faso on November 7, 2013.
The Vindaloo zones are hosted by Proterozoic-age, Birimian Group, intensely sericite- and silica-altered mafic intrusions and similarly-altered, strongly foliated and altered intermediate to mafic volcaniclastics and occasionally sediments. The mineralization is often quartz stockwork-style and is weakly to moderately pyritic. The Vindaloo trend has been drill tested for a distance of approximately 7.7 kilometres along strike and up to 350 metres depth. The intrusion-hosted zones range up to 70 metres in true thickness and average close to 20 metres true thickness along a 1.2 km section of the zone called Vindaloo Main. Volcanic- and sediment-hosted zones are generally less than 5 m wide. The entire mineralized package strikes north-northeast and dips steeply to the west to vertical. The mineralization remains open both along strike and to depth.
During Q4/2012 and Q1/2013, Endeavour completed 40,534 metres of drilling in 358 holes with a specific goal of upgrading the Inferred in-pit Mineral Resources to Indicated Mineral Resources and some Indicated Mineral Resources to Measured Mineral Resources. Endeavour's drilling in conjunction with previous drilling comprise a drill database of 751 core and RC holes totalling 103,677 metres that supported the creation of an updated, in-pit Mineral Resources statement, which is summarized in Table 1.
Table 1: Hound� Mineral Resources1 (Cube, 2013)
|
Resource Classification |
Weathering
Zone |
Tonnage
Mt |
Grade g/t Au |
Contained Gold (koz) |
|
Measured |
Saprolite |
0.45 |
2.08 |
30 |
|
Transitional |
1.56 |
2.64 |
133 |
|
Fresh |
1.74 |
2.51 |
140 |
|
Total |
3.75 |
2.51 |
303 |
|
Indicated |
Saprolite |
1.64 |
1.45 |
77 |
|
Transitional |
1.40 |
1.93 |
87 |
|
Fresh |
22.62 |
1.94 |
1,407 |
|
Total |
25.66 |
1.90 |
1,571 |
|
Measured & Indicated |
Saprolite |
2.09 |
1.59 |
107 |
|
Transitional |
2.96 |
2.31 |
220 |
|
Fresh |
24.36 |
1.98 |
1,547 |
|
Total |
29.41 |
1.98 |
1,874 |
|
Inferred |
Saprolite |
0.28 |
1.40 |
13 |
|
Transitional |
0.29 |
1.60 |
15 |
|
Fresh |
1.27 |
2.57 |
105 |
|
Total |
1.84 |
2.24 |
133 | Note: Mineral Resources are constrained by a pit shell at $1,600/oz
and are reported at a cut-off grade of 0.35 g/t Au
The FS considered the owner operated development of five open pits in the Vindaloo and Madras NW zones over an 8.1 year time period, including 3 months of pre-strip. The Vindaloo pits would mine a series of closely spaced gold zones along an approximate 4.8 km strike length. The Madras NW pits would be mined along an approximately 900 metres long zone and would only mine saprolite and transition mineralization.
Diluted Proven and Probable Mineral Reserves total 24.64 million tonnes grading 1.95 g/t Au totalling 1.55 million ounces (see Table 3), reported at a range of cut-off grades from 0.35 g/t Au to 0.62 g/t Au depending on the zone and oxidation type. In addition, 660,000 tonnes of Inferred Mineral Resources grading 1.61 g/t Au lie within the pit envelope. However, only Measured and Indicated Mineral Resources were considered in the mine design and production schedule. The key FS parameters are summarized in Table 2 and the Mineral Reserves are summarized in Table 3.
Table 2: FS Parameters
|
Item |
Unit |
FS |
| Revenue, Smelting & Refining |
|
|
| Gold Price |
US$/oz |
$1,300 |
| Payable Metal |
%Au |
99.95% |
| Refining/Transport |
US$/oz |
$3.35 |
| Royalties @ 4% of NSR |
US$/oz |
$51.84 |
| Royalties @ 2% of NSR |
US$/oz |
$25.92 |
| Net Gold Price |
US$/oz |
$1,218.24 |
|
US$/g |
$39.17 |
| OPEX Estimates |
|
|
| Average Mining Cost |
US$/mined |
$2.03 |
| Strip Ratio |
t:t |
8.48 |
| OP Mining Cost |
US$/t milled |
$19.25 |
| Processing Cost |
US$/t milled |
$14.31 |
| G&A |
US$/t milled |
$3.53 |
| Total OPEX |
US$/t milled |
$37.09 |
| Process and Mining Losses |
|
|
| Process Recovery |
Variable |
92.4% to 95.4% |
| Dilution / Ore Loss |
% |
6.5% / 5.2% |
| Geotechnical Parameters |
|
|
| Slope Angles (overall) |
|
|
| Saprolite |
degrees |
28 to 41 |
| Transition |
degrees |
38 to 43 |
| Fresh |
degrees |
43 to 50 |
| Mill Throughput |
Mtpa |
3.0 |
Table 3: FS Mineral Reserves by Classification and by Rock Type (Orelogy, 2013)
Mineral Reserves by Classification
|
|
Ore |
Waste |
|
Total Material |
|
Reserve Classification |
Tonnage |
Grade |
Contained Gold |
Tonnage |
Strip Ratio |
Tonnage |
|
Mt |
Au (g/t) |
Moz |
Mt |
Mt |
|
Proven |
3.8 |
2.43 |
0.30 |
209.0 |
8.48 |
233.6 |
|
Probable |
20.9 |
1.87 |
1.25 |
|
Total |
24.6 |
1.95 |
1.55 |
Mineral Reserves by Rock Type
|
|
Ore |
Waste |
|
Total Material |
|
|
Tonnage |
Grade |
Contained Gold |
Tonnage |
Strip Ratio |
Tonnage |
|
Rock-Type |
Mt |
Au (g/t) |
Moz |
Mt |
Mt |
|
Saprolite |
1.9 |
1.52 |
0.09 |
209.0 |
8.48 |
233.612014 |
|
Transition |
2.8 |
2.25 |
0.20 |
|
Fresh |
20.0 |
1.96 |
1.25 |
|
Total |
24.6 |
1.95 |
1.55 |
Studies of 22 metallurgical samples from the Vindaloo and Madras NW zones indicated average assumed mill recoveries of 93.37%. Recoveries of 93.5% for the Vindaloo Main zone fresh mineralization were achieved by fine grinding of gravity concentrates to 80% passing 10 micron from an initial grind of 80% passing 90 micron. More than 70% of the gold is contained in a 2.5% mass pull gravity concentrate. The processing plant consists of a 3.0 million tonne per year primary crushing with SABC milling circuit to feed a gravity / CIL plant. Ground ore will feed continuous centrifugal gravity concentrators to recover free and occluded gold in heavy particles (pyrite) to the gravity concentrate. This concentrate will be reground and will feed a concentrate leach circuit. The gravity concentration tails will be thickened and feed a standard CIL circuit, with leach tails passing into a cyanide destruction process before being pumped to tailings storage. Average production of 178,000 ozs/year over a period of 8.1 years is anticipated with a high of 215,300 ozs in year 2 and low of 136,900 ozs in year 7.
Table 4: Hound� LOM Production Profile
| |
Year |
-1 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
Total |
| Mining |
|
|
|
|
|
|
|
|
|
|
|
|
| Ore Mined |
kt |
146 |
3,264 |
3,064 |
3,003 |
3,301 |
2,501 |
3,001 |
3,201 |
3,102 |
63 |
24,644 |
| Grade |
g/t Au |
1.77 |
2.07 |
2.32 |
2.08 |
1.89 |
2.39 |
1.86 |
1.49 |
1.67 |
1.35 |
1.95 |
| Waste Mined |
kt |
3,077 |
29,407 |
31,168 |
28,145 |
38,328 |
36,200 |
20,087 |
17,593 |
4,938 |
26 |
208,968 |
| Total Mined |
kt |
3,223 |
32,670 |
34,232 |
31,148 |
41,629 |
38,701 |
23,087 |
20,793 |
8,040 |
88 |
233,612 |
| Strip Ratio |
Ratio |
21.1 |
9.0 |
10.2 |
9.4 |
11.6 |
14.5 |
6.7 |
5.5 |
1.6 |
0.4 |
8.5 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Processing |
|
|
|
|
|
|
|
|
|
|
|
|
| Saprolite |
kt |
|
773 |
207 |
13 |
0 |
21 |
0 |
732 |
135 |
46 |
1,928 |
| Grade |
g/t Au |
|
1.85 |
2.48 |
2.42 |
0.00 |
2.21 |
0.00 |
0.97 |
1.07 |
1.06 |
1.52 |
| Transition |
kt |
|
941 |
1,053 |
174 |
0 |
204 |
0 |
142 |
52 |
199 |
2,765 |
| Grade |
g/t Au |
|
2.01 |
2.64 |
2.56 |
0.00 |
2.54 |
0.00 |
2.06 |
1.14 |
1.17 |
2.25 |
| Fresh |
kt |
|
1,419 |
1,843 |
2,813 |
3,000 |
2,775 |
3,000 |
2,194 |
2,813 |
95 |
19,951 |
| Grade |
kt |
|
2.13 |
2.10 |
2.08 |
1.87 |
2.33 |
1.86 |
1.63 |
1.75 |
1.50 |
1.96 |
| Total Ore |
kt |
|
3,133 |
3,103 |
3,000 |
3,000 |
3,000 |
3,000 |
3,069 |
3,000 |
340 |
24,644 |
| Grade |
g/t Au |
|
2.03 |
2.31 |
2.11 |
1.87 |
2.35 |
1.86 |
1.49 |
1.71 |
1.25 |
1.95 |
| Contained Gold |
k ozs |
|
204.0 |
230.2 |
203.3 |
180.2 |
226.2 |
179.3 |
147.1 |
164.8 |
13.6 |
1,548.7 |
| Recovery |
% |
|
93.8% |
93.6% |
93.4% |
93.5% |
93.3% |
93.6% |
93.1% |
92.8% |
87.7% |
93.3% |
| Recovered Gold |
k ozs |
|
191.3 |
215.3 |
189.9 |
168.4 |
211.1 |
167.8 |
136.9 |
152.9 |
11.9 |
1,445.5 | Notes: Stockpiling strategies for various mineralization types will cause slight annual variations compared to this high-level summary. A further payables factor of 99.5% has been applied to gold production for preliminary economic modelling.
Figure 2: Hound� FS General Site Layout - Mine, Waste Dumps, and Plant Location
The tailings storage facility is located 4 km west of the plant in a natural valley. Studies indicate that the tailings storage does not need to be lined as the near-surface, clay-rich substrate would limit migration of tailings fluids away from the site. Decant fluids, though, are not suitable for release to the environment and will be pumped back to the plant. An impact assessment, including a dam break scenario, indicates a high consequence in the event of a wall failure and the tailings embankments were designed to reduce this risk. Closure will require covering the surface with 0.8 metres of broken rock and saprolite. The facility has the potential to hold up to 100% more than is currently designed.
A water balance study indicated that a water harvest dam and separate water storage dam having combined storage of just over 3 million cubic metres would easily fill in one wet season and would contain sufficient water for plant operations demand during a 1:100 year dry season. Camp water would be sourced from nearby wells.
Power for the processing plant will come from the adjacent 225 kV power line that extends from C�te d'Ivoire to Ouagadougou. Sonabel, the state power entity, have agreed, in principle, to sell power to the project; however, the terms and conditions of this sale have not been defined.
Project staff will include approximately 470 people, not including catering and cleaning staff and miscellaneous contractors with 41 international and African expatriates and 430 Burkinabe employees. A camp to house 130 senior staff will be installed with the remaining employees living in the nearby communities.
The ESIA, which has a goal of being IFC compliant, outlines Endeavour's responsibilities to the well-being of the people and the environment during the development, operation and closure of the Hound� gold project. The project will require the acquisition of 2,096 ha of land. Several major land owners own the bulk of the land, however, numerous subsistence farmers rent portions of the land from the land owners. Compensation mechanisms for the land, buildings, trees and crops are part of the ongoing permitting process. Typical concerns, as a result of the project development include changes to quality of life, loss of livelihood, environmental degradation, potential for jobs, potential health issues, increase in traffic etc. Permitting is expected to take between six to nine months to complete.
Hound� Capital Cost Estimate and Financial Summary
The total estimated cost to bring the Hound� Gold Project into production is $315 million, inclusive of contingency, working capital, and import duties, as summarized in Table 5. The FS shows that the Hound� Project generates the financial results shown in Table 6.
Table 5: Hound� Capital Cost Estimate
|
Hound� Capital Cost |
US$ Million |
| Mining Equipment |
69.8 |
| Mine Pre-Production Stripping |
5.4 |
| Process Plant |
78.7 |
| Reagents and Plant Services |
7.7 |
| Tailings Storage Facility |
5.6 |
| High Voltage Power Line |
13.1 |
| Infrastructure (Water, Roads, Buildings) |
16.5 |
| Construction Indirects |
14.9 |
| EPCM |
20.3 |
| Owner Project Costs |
23.1 |
| Owner Costs (Land, Light Vehicles, Other) |
16.7 |
| Sub-Total |
271.9 |
| Working Capital |
15.1 |
| Import Duties |
4.5 |
| Sub-Total |
291.5 |
| Contingency |
23.4 |
| Grand Total |
314.9 |
Table 6: Hound� FS Financial Results
| |
|
At $1,300/oz Gold Price
(Base Case) |
At $1,500/oz Gold Price (Sensitivity) |
| Pre-Tax |
|
|
|
|
NPV 0% |
$ million |
$449 |
$721 |
|
NPV 5% |
$ million |
$293 |
$504 |
|
IRR |
|
26.0% |
38.3% |
| After-Tax |
|
|
|
|
NPV 0% |
$ million |
$364 |
$593 |
|
NPV 5% |
$ million |
$230 |
$408 |
|
IRR |
|
22.4% |
33.4% |
|
Cash Cost excluding. Royalties |
$/oz |
$636 |
$636 |
|
Cash Cost including Royalties |
$/oz |
$714 |
$726 |
|
All-in Sustaining Cost |
$/oz |
$775 |
$787 |
|
Life of Mine Gold Production |
koz |
1,445 |
1,445 |
Project Schedule
The project permitting process has been started and is anticipated to take 6 to 9 months. Engineering, procurement and construction is estimated at 21 months from Board approval to first gold.
Updated Technical Report
An updated NI 43-101 compliant Technical Report on the Hound� Gold Project will be filed on www.sedar.com within 45 days of this news release.
Qualified Persons
The FS will be authored by the independent Qualified Persons, with the exception of Mr. Don Dudek who is employed by Endeavour, who have verified the data in this news release.
| Mark Zammit, BSc(Hons), GradCertGeostat MAIG |
Principal Consultant Geologist, Cube Consulting |
| |
| Ross Malcolm Cheyne, BE (FAusIMM) |
Director/Principal Consultant, ORELOGY Group Pty Ltd |
| |
| Michael Warren BSc, MSc Eng, MIEAust, CPEng (ret) |
Study Manager, Lycopodium Minerals Pty Ltd |
| |
| David Morgan BSc, MSc, CPEng, AUSIMM |
Managing Director, Knight Pi�sold Pty Ltd |
| |
| Peter O'Bryan BE (Mining) MEngSc MAusIMM (CP) |
Geotechnical Engineer, Peter O'Bryan and Associates |
| |
| Don Dudek, P.Geo |
Senior Vice President - Technical Services, Endeavour Mining Corporation |
Mr. Dudek, P.Geo, is a Qualified Person within the definition of that term in NI 43-101 and has supervised the preparation of the technical information contained in this news release.
About Endeavour Mining Corporation
Endeavour is a gold producer delivering growth. Endeavour owns three gold mines producing more than 300,000 ounces per year in Mali, Ghana and Burkina Faso. Endeavour's annual gold production is forecast to exceed 400,000 ounces per year during 2014, including the start-up of production at the Agbaou Gold Mine in Cote d'Ivoire scheduled for Q1 2014. In addition, in November 2013 a Feasibility Study for the Hound� Project in Burkina Faso was completed showing potential for approximately 180,000 ozs per year over 8 years.
Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).
On behalf of Endeavour Mining Corporation
Neil Woodyer
Chief Executive Officer
1Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.
This news release contains "forward-looking statements" including but not limited to, statements with respect to Endeavour's plans and operating performance, the estimation of mineral reserves and resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts" and "anticipates". Forward-looking statements, while based on management's best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Endeavour operates. Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour's most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.
For additional information, contact:
Doug Reddy
Senior Vice President -- Business Development
+1 604 609 6114
dreddy@endeavourmining.com
UK/Europe: Bobby Morse
Buchanan
+44 20 7466 5000
bobbym@buchanan.uk.com
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