Updated - West African Resources Releases Pre-Feasibility Study
11.03.2015 | FSCwire
Perth, Australia (FSCwire) - West African Resources Limited (ASX, TSXV: WAF) is pleased to announce results of its technical and financial assessment of an oxide heap leach starter project on its Mankarga 5 Gold Project, Burkina Faso. This assessment constituted a Pre-Feasibility Study (PFS) incorporating updated Mineral Resource, mining schedule, column test work and cost inputs. It was prepared in accordance with the requirements of both the Australian 2012 JORC Code and Canadian NI 43-101The Pre-Feasibility Study (PFS) evaluation was managed by engineering consulting firm Mintrex Pty Ltd based in Perth, Western Australia with input from a range of specialist consultants and was completed to ± 30% input cost estimate. A technical report will be filed on www.sedar.com within 45 days.
The PFS assumes annual throughput of 1.6Mtpa, which is in line with the capacity of the plant the Company purchased in 2014. The base case is stated assuming 100% project basis and a gold price of $1,300/oz. All amounts are in US dollars unless otherwise stated.
Table 1 - Economic Summary
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
* Allows for 10% free carried Government interest
Changes from 2014 Scoping Study
The PFS evaluation represents an update to the July 2014 Scoping Study. The base case in the Scoping Study and PFS both used a $1300/oz gold price and annual throughput of 1.6Mtpa. The PFS includes a number of significant improvements in comparison with the Scoping Study including:
- Updated resource model incorporating 22,000m of new drilling. Drilling focussed on increasing drill density of shallow oxide material resulting in an overall improvement in grade.
- Optimised mine plan incorporating updated contract mining costs with moderate increase in stripping ratio resulting in more in pit ounces.
- Updated operating costs incorporating contractor quotation for contract mining, reductions in consumables pricing including cement and cyanide. Reduction in diesel price.
- Updated capital costs incorporating preliminary heap leach pad design, preliminary design of the water collection and storage facility, and updated unit rates based on recent tenders in Burkina Faso for civil works costings.
- Updated sustaining capital costs reflecting the longer life and incorporating additions to the crushing circuit to maintain throughput in later years.
- Representative treatment of deferred waste and inventory stockpiles.
Table 2 - Changes From 2014 Scoping Study to 2015 PFS
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Table 3 – PFS Authors
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Tenure
West African Resources Ltd holds a 90% interest in the Tanlouka Permit, which hosts the Mankarga 5 Mineral Resource, the subject of this PFS. The Company entered into an agreement in March 2014 to acquire the remaining 10% of the Tanlouka Permit (ASX, TSXV: 5/3/2014) which is conditional on completion of a positive feasibility by September 2015. The Tanlouka Permit (Arrêté No 2012- 000321/ MCE/SG/DGMG) was renewed in 2012 for a further three years. West African Resources Ltd intends to apply for a mining permit in the second half of 2015. The Burkina Faso Government has a right to a 10% free-carried interest in all mining projects. The payment of gross production royalties are payable for gold price ranges from
Mineral Resources
The Mankarga 5 Mineral Resources estimate used for the PFS was prepared by independent resource consultants International Resource Solutions Pty Ltd (IRS) and was reported in accordance with NI 43-101 standards and JORC (2012) guidelines. The Mankarga 5 Mineral Resource contains:
- Resources at a 0.5g/t cut-off are estimated at 19 million tonnes grading 1.2g/t gold containing 736,000 ounces gold (Indicated), and 40.4 million tonnes grading 1.0 g/t gold containing 1,350,000 ounces gold (Inferred)
- Resources at a 1g/t cut-off are estimated at 8.4 million tonnes grading 1.8g/t gold containing 495,000 ounces gold (Indicated), and 15.2 million tonnes grading 1.6 g/t gold containing 791,000 ounces gold (Inferred)
- 35% of the Mankarga 5 Deposit classified as Indicated and 92% of the oxide and transitional mineralisation classified as Indicated
- Near-surface oxide and transition Indicated Resources (at a 0.5 g/t cut-off) estimated at 9.5 million tonnes at a grade of 1.2g/t gold containing 362,000 ounces gold
Table 4: Mankarga5 February 2015 Resource
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Cautionary Note About Mineral Resources:
Mineral Resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.
The area of the Mankarga 5 Mineral Resource was drilled using Reverse Circulation (RC), Aircore (AC) and Diamond drill holes (DD) on a nominal 50m x 25m grid spacing. A total of 502 AC holes (17,705.5m), 18 DD holes (3,162.5m) and 6 RC drillholes with diamond tails (1,156.6m) were drilled by West African Resources (WAF) in 2013-2014. A total of 60 RC holes (7,296.2m) and 71 DD holes (15,439.6m) were drilled by Channel Resources (CHU) in 2010-2012. Holes were angled towards 120° or 300° magnetic at declinations of between -50° and -60°, to optimally intersect the mineralised zones.
MINERAL RESERVES
Mineral reserves were developed using a Whittle 4D pit optimization process with operating cost, recovery, and pit slopes inputs and a gold price of US$1250/oz. Reserves were defined by minable pit designs and including mining losses and dilution.
The Probable mineral reserves were based on Indicated mineral resources only. Inferred mineral resources falling within the pits were treated as waste regardless of grade. A breakdown of Probable mineral reserves by material type is shown below in Table 5.
Table 5: Mankarga 5 Probable Mineral Reserves
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
The Probable mineral reserves are 75% oxide, 12% transition, and 13% fresh on the basis of ore tonnage. Table 6 shows the various cut-off grades for each ore type used to define the Mankarga 5 Project Probable mineral reserve.
Table 6: Mankarga 5 Probable Mineral Reserves
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Mining
The PFS proposes the development of the Mankarga 5 deposit via conventional truck and excavator open pit mining methods, including drill and blast, load and haul, using mining contractors. The mine design was completed in Surpac based on modified Whittle optimisation shells derived from the recent resource model developed by International Resource Solutions Pty Ltd. Various mining rates were considered however the optimal result was achieved based on the assumption of the open pit being mined out over a 50 month period using a mining contractor and a 250 tonne hydraulic excavator. Mining is proposed to advance continuously with ore stockpiled according to gold grade and oxidation state.
The final open pit footprint will be approximately 2,400m long by up to 300m wide and to a maximum depth of 130 vertical metres. Total material movement over the life of mine is estimated at 33.9Mt including 11.2Mt of plant feed for a 2 : 1 LOM waste to ore strip ratio. Over 87% of the plant feed is classified as oxide and transitional material. Strongly oxidised material is expected to be free dig with paddock scale drill and blast required for the remainder of the material. Approximately 13% of the total material is hard fresh rock which will require engineered blasting.
Processing
The PFS assumes Mankarga 5 material will be processed by conventional heap leach processing with an initial production throughput of 1.6Mtpa. Column heap leach cyanidation test work to date has confirmed heap leach potential (ASX, TSXV: 14/10/2014). Life of mine recoveries average 80%. Test work also demonstrated low cyanide consumption of 0.3-0.5kg/t.
The process design proposes utilising existing plant and equipment purchased by West African earlier in 2014 with the installation of a new secondary crusher. The design proposes two stage crushing, cement addition and agglomeration, and overland conveying to heap leach pads. The pad area is designed with full plastic HDPE lining; conveyor stacking in three six metre lifts; and drip irrigation with dilute sodium cyanide solution. The adsorption plant is based on the purchase of new equipment which would be a modular design with gold recovery via elution, electrowinning and smelting to produce gold doré.
All of the plant feed over the LOM is in the Indicated Mineral Resource category. Some 0.7Mt of Inferred material containing 21,000 ounces has been mined but treated as waste for the purposes of this study. With further drilling in-pit Inferred Mineral Resources should be upgraded.
Infrastructure
The development project will require investment in the following areas.
Site Development
The development plan proposes the plant ROM pad and primary crusher to be located approximately 600m from the northern side of the Heap Pad to minimise conveying distance for the agglomerate. The ADR, reagents, elution and gold room will be located close to the pregnant solution ponds. Pregnant solution and storm water ponds will be located southeast of the heap utilising natural fall of the surface from northwest to southeast. Plant administration buildings will be located close to the gold recovery plant. The study assumes that the mining contractor will be responsible for establishing all of the facilities required for all mining and maintenance.
Power Supply
The study proposes 3 x 750kW diesel-fired generators which will be modular and complete with acoustic enclosures and cooling systems. A Build Own Operate (BOO) contract will be adopted for the supply of this facility.
Operational Water Supply
The plants raw water will be supplied from a Water Storage Facility (WSF) which will be supplied from rain water runoff into a nearby drainage system. It is intended to construct the WSF prior to the wet season to ensure sufficient water is stored when the plant goes into production. Potable water will be sourced from water bores.
Accommodation
The study proposes building a camp suitable to accommodate 65 personnel (with a financing agreement being used for provision of the camp) and assumes that the mining contractor will be responsible for the provision of their own camp.
Roads
The project area is located approximately 90km east southeast of the Capital Ouagadougou, and is accessed via bitumen highway (RN4) towards Koupela. Approximately 5km of existing dirt road will need to be upgraded from the town of Zempasgo to the proposed site. The development plan also accounts for general site access and haul roads.
Permitting
WAF has appointed Knight Piesold Pty Ltd (KP) to assist it with the execution of ESIA studies. KP has previous experience in Burkina Faso and will utilise the services of local consultancy INGRID (L’Institut de Gestion des Risques Miniers et du Developpment) in undertaking many of the studies and the preparation of the documents required for the project’s approval.
In October 2014 WAF submitted its Project Screening letter to Bureau National des Evaluations Environnmentales (BUNEE) for assessment. In it the Company requested that the mine site and the water storage facility (WSF) be considered separately, so that permitting of the WSF could be fast tracked to allow for the capture and harvesting of wet season runoff prior to the commencement of mining and processing. BUNEE subsequently agreed to this request and assessed the project as follows:
• The mine site and its infrastructure, other than the WSF was assessed as a Category A activity requiring an Etude d’
Impact sur l’Environnement) (ESIA).
• The WSF was assessed as a Category B activity requiring a Notice d’Impact sur Environnement (NIE).
ESIA studies are on-going. The completion of the environmental studies and approval by BUNEE are anticipated to be Q2 and Q3 2015 for the WSF and mine respectively.
Capital Costs
The capital cost estimate has been prepared to a level equivalent of a PFS and is presented in US dollars to an accuracy level of ± 30%. The pre-production capital cost for the heap leach starter project is $36.9M plus working capital of $3.6M and contingency of $6.1M, for a total pre-production capital cost of $46.6M. A summary of the capital cost estimate is presented below.
Table 7 - Capital Cost Estimate
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
A further $20.0M in sustaining capital costs are estimated over the LOM, including $11.3M of heap leach pad development.
Operating Costs
Mine operating costs for processing, maintenance, mining and administration have been estimated for a number of sources including:
- First principle estimates
- Consumption rates as provided in the Process Design Criteria
- Mintrex database of costs for similar operations in the West African region
The LOM total cash costs for the project are estimated to be $635/oz and a breakdown is presented below in Table 8.
Table 8 – LOM Operating Costs
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Sensitivity Analysis
Sensitivity analysis was completed on the Mankarga 5 starter project based on +/- 10% changes in capital cost, operating cost and gold price.
Table 9 - Project Sensitivity NPV5% (Pre Tax)
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Cashflow
Cashflow from operations totals $146M over the project life after initial and sustaining capital and royalties. Following a 9 month construction phase the cash generated under the base case assumptions allows a capital payback in 14 months. Importantly, after two years of operations the project has generated $83m in cashflow from operations before tax and capital costs.
Growth Potential
There are a number of drill-ready targets within a short trucking distance from the starter project which have potential to add further plant feed to the starter project, including Mankarga 1, Manesse, Tanwaka, Goudré and Moktedu. Currently some 0.7Mt of Inferred Mineral Resource is treated as waste in the study mine schedule. With infill drilling this material should be upgraded to Indicated category and treated as plant feed. At the end of the proposed starter project a significant resource will remain beneath the open pit comprising Indicated Resources of 3.1Mt at 1.7g/t Au (173koz) and Inferred Resources of 14.9Mt at 1.6g/t Au (779koz) at a 1g/t Au cut-off (Table 10). Test work reported in July 2014 (ASX, TSXV: 9/6/14) confirmed mineralisation is non-refractory and amenable to conventional milling and CIL processing with recoveries of up to 98.5% and averaging 93.8% in direct cyanidation test work. This resource is open at depth and along strike to the northeast.
Table 10: Mankarga5 February 2015 Sulphide Resource after Starter Project
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-pre-feasibility-study
Project Timeline
An updated project timeline is presented below.
Timeline of Key Deliverables
http://www.fscwire.com/newsrelease/updated-west-african-resources-releases-
For further information contact:
West African Resources Ltd.
Richard Hyde, Managing Director
Ph: 08 94817344
Nathan Ryan, Investor Relations
Ph: 0420 582 887
Email: info@westafricanresources.com
Qualified/Competent Person’s Statement
Information in this announcement relating to the Pre-Feasibility Study has been prepared by and compiled under the supervision of Dr Leon Lorenzen, an Independent Consultant and Director of Mintrex Pty Ltd, who is a Fellow of the Australian Institute of Mining and Metallurgy (CP) and Fellow of the Institution of Engineers Australia. Dr Lorenzen has sufficient experience which is relevant to and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Dr Lorenzen has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.
Information in this announcement that relates to mineral resources is based on, and fairly represents, information and supporting documentation prepared by Mr Brian Wolfe, an independent consultant specialising in mineral resource estimation, evaluation and exploration. Mr Wolfe is a Member of the Australian Institute of Geoscientists. Mr Wolfe has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Wolfe has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.
Information in this announcement that relates to exploration results and exploration targets is based on, and fairly represents, information and supporting documentation prepared by Mr Vincent Morel, an employee of the Company, who is a Member of The Australian Institute of Geoscientists. Mr Morel has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Morel has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.
Information in this announcement that relates to metallurgical test work results is based on, and fairly represents, information and supporting documentation prepared by Mr Stuart Smith, a Director of metallurgical consulting firm Aurifex, who is a Fellow of The Australian Institute of Mining and Metallurgy. Mr Smith has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person (or “CP”) as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) and a Qualified Person under Canadian National Instrument 43-101. Mr Smith has reviewed the contents of this news release and consents to the inclusion in this announcement of all technical statements based on his information in the form and context in which they appear.
Regulatory Disclaimer and Related Information
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This announcement has been prepared in compliance with the JORC Code 2012 Edition, the ASX Listing Rules and Canadian National Instrument 43-101 (Disclosure Standards for Mineral Projects). The information relating to the historic Mankarga 5 Mineral Resource Estimate is extracted from Channel's NI43-101 report dated August 17, 2012 and is available to view on www.westafricanresources.com and on profile of Channel Resources Ltd (now a subsidiary of the Company) on www.sedar.com.
Forward Looking Information
This news release contains “forward-looking information” within the meaning of applicable Canadian and Australian securities legislation, including information relating to West African's the potential economic feasibility of a principal mineral project, future financial or operating performance may be deemed “forward looking”. All statements in this news release, other than statements of historical fact, that address events or developments that West African expects to occur, are “forward-looking statements”. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “does not expect”, “plans”, “anticipates”, “does not anticipate”, “believes”, “intends”, “estimates”, “projects”, “potential”, “scheduled”, “forecast”, “budget” and similar expressions, or that events or conditions “will”, “would”, “may”, “could”, “should” or “might” occur. All such forward-looking statements are based on the opinions and estimates of the relevant management as of the date such statements are made and are subject to important risk factors and uncertainties, many of which are beyond West African’s ability to control or predict. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. In the case of West African, these facts include their ability to secure additional funding, anticipated operations in future periods, planned exploration and development of its properties, and plans related to its business and other matters that may occur in the future. This information relates to analyses and other information that is based on expectations of future performance and planned work programs. Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if a mineral property is developed.
Forward-looking information is subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking information, including, without limitation: gold price volatility, investor interest in financing of junior resource issuers, exploration hazards and risks; risks related to exploration and development of natural resource properties; uncertainty in West African’s ability to obtain funding on reasonable terms or any terms at all; financial market conditions ; risks related to the uncertainty of mineral resource calculations and the inclusion of inferred mineral resources in economic estimation; risks related to governmental regulations; risks related to obtaining necessary licenses and permits; risks related to their business being subject to environmental laws and regulations; risks related to their mineral properties being subject to prior unregistered agreements, transfers, or claims and other defects in title; risks relating to competition from larger companies with greater financial and technical resources; risks relating to the inability to meet financial obligations under agreements to which they are a party; ability to recruit and retain qualified personnel; and risks related to their directors and officers becoming associated with other natural resource companies which may give rise to conflicts of interests. This list is not exhaustive of the factors that may affect West African’s forward-looking information. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking information.
West African’s forward-looking information is based on the reasonable beliefs, expectations and opinions of their respective management on the date the statements are made and West African does not assume any obligation to update forward looking information if circumstances or management’s beliefs, expectations or opinions change, except as required by law. For the reasons set forth above, investors should not place undue reliance on forward-looking information. For a complete discussion with respect to West African, please refer to West African’s financial statements and related MD&A, all of which are filed on SEDAR at www.sedar.com.
Copyright © 2015 Filing Services Canada Inc.