May 6 2019
Perseus Mining Limited takes pleasure in announcing that its Board of Directors has officially sanctioned the construction of the third gold mine, the Yaouré Gold Mine in Côte d’Ivoire, of the company.
With a predicted capital cost of US$265 million, Yaouré is anticipated to become a large-scale, less expensive gold mining operation that will form a significant part of asset portfolio of Perseus for several years to come.
The sure decision of the Board to enhance Yaouré accompanies the recent granting of an Exploitation Permit by the government of Côte d’Ivoire to Perseus Yaouré SARL, Perseus’s Ivorian subsidiary, and confirmation of development funding plan of Perseus that includes using, partly, a US$150 million considering credit facility, strong future cashflows from Edikan and Sissingué gold mines of Perseus, and US$121 million of existing cash and bullion including US$40 million of cash recently obtained from the underwritten exercise of warrants.
The decision of the Board to advance with the development will immediately come into effect, which opens the door for the implementation of the Engineering and Supply Contracts between Perseus and Lycopodium Limited, the well-certified engineering company. Previously, Perseus has worked successfully together with Lycopodium, most particularly on the ahead-of-time, on-budget development of Perseus’s Sissingué Gold Mine, as well as in Côte d’Ivoire, which was commissioned in early 2018.
When Perseus acquired Amara Mining plc in April 2016, our primary objective was to bring Yaouré into production as soon as practical. With the decision announced today, we have moved one step closer to achieving this goal and in doing so, we are firmly placed on the path to achieving our stated aim of producing more than 500,000 ounces of gold at an all-in site cost of less than US$850 per ounce from multiple mines in several jurisdictions in West Africa. A large amount of effort has gone into preparation and planning of the development of Yaouré and with the experience that our team developed from the successful execution of the Sissingué Mine development plan, we are confident that Yaouré will also be developed on time and on budget and in the process further establish Perseus’s reputation as a reliable and capable developer and operator of gold mines in West Africa.
Jeff Quartermaine, Chief Executive Officer and Managing Director, Perseus
Lycopodium was issued with a Notice of Award for the Engineering and Supply Contracts on January 10th, 2019, and from then, the in-house development team of Lycopodium and Perseus, serving in anticipation of a forthcoming positive development decision, has worked toward the start of full-scale development.
During this period, detailed engineering has been progressed, and supply contracts, which include a contract with Outotec for the manufacture and supply of the SAG and Ball mills, have been conditionally awarded to suppliers of a large proportion of the plant and equipment required for the processing facility.
These orders will now be confirmed, fixing about 50% of the capital budget and allowing the development to continue as per schedule. Under the agreement of the contract of Lycopodium, the first gold is due to be poured at Yaouré by January 23rd, 2021, although a “stretch target” involving an earlier gold pour in December 2020 is being followed.
The payment of all outstanding crop, sacred site, and land compensation is another activity on the crucial path of development. This is well progressed with crop compensation paid in full, and about 80% of landowners paid compensation at rates mentioned by the local decree of the Prefect. Negotiation of compensation rates for sacred sites will be determined shortly once the payments for land compensation are complete. Compensation payment to farmers and landowners is needed before clearing and preparing the sites for the processing facility and the tailings dam can start.
Tendering of civil work for the preparation of the site is anticipated to be over by the end of May, facilitating work to progress before the onset of the peak of the wet season that usually occurs in August and September.
A special committee formed by the representatives of the departments of Finance, Mining, Budget, and Environment will represent the Ivorian government in negotiations with Perseus for a Mining Convention to form a stable fiscal and social environment for the project. Finalization and execution of the Convention are due in the September 2019 quarter.
Simultaneously with the start of the development activities on the Yaouré site, Perseus has also planned to reactivate exploration activities close to the proposed mine site. A high priority will be placed on the progress of work focusing on describing further mineralization that can be mined from below the proposed CMA open pit using underground methods.
In November 2018, Perseus reported that a preliminary Inferred Mineral Resource had been estimated for a potential underground mining operation at Yaouré (to widen the CMA open pit operation) that summed 3.0 million tons, grading 6.2 g/t gold and containing 595,000 ounces of gold. Noting that Mineral Resources for a potential underground mining operation remain open along strike and at depth, a scoping study for a potential underground mining operation was prepared by Perseus, which indicated that
- Underground access from CMA open pit of Yaouré jointly with the selected mining method considerably reduces the capital development requirements
- Inferred Mineral Resources appear manageable to extract using mechanized underground room and pillar mining methods
- More Mineral Resource drilling and technical studies are required to enable Ore Reserve definition
- There are no known impediments to future underground development at Yaouré
With the approval of development funding and a decision taken to start the activities of the development, Perseus is well funded and aims to undertake the exploration and Mineral Resource definition work required to materially adding to the Yaouré’s Ore Reserve base and life of mine plan, well beyond the current nine-year horizon, with great effort.