Construction under way at Burkina Faso’s Houndé gold project
TSX-listed gold miner Endeavour Mining announced earlier this month that its 90%-owned Houndé project has entered the construction phase of development, following approval from its board of directors.
The project is expected to deliver average production of 190 000 oz/y of gold over a ten-year life-of-mine at an all-in sustaining cost of $709/oz, based on current reserves.
The project is an openpit mine with a three-million-ton-a-year gravity circuit/carbon-in-leach plant. The initial capital cost is estimated at $328-million, inclusive of $47-million for the owner-mining fleet. The project is permitted to start operations and early earthworks are currently under way.
Meanwhile, Endeavour acquired a 90% stake in TSX-listed True Gold last month, which owns and operates the Karma gold mine, in Burkino Faso.
Endeavour CEO Neil Woodyer points out that, with the Karma mine expected to start ramp-up soon and the strong performance of the company’s other assets, the company can develop the Houndé project, which he asserts will “further lift the overall quality of our portfolio”.
He adds that the project will become the company’s flagship low-cost operation once production starts and “will rank among West Africa’s top tier cash-generating mines”.
Woodyer explains that the project is fully funded by Endeavour’s expected pro forma cash position following the acquisition of True Gold, mine equipment financing and an undrawn portion of the company’s revolving credit facility.
“However, rather than draw on our revolving facility, our objective is to fund the remaining capital needs from free cash flow. We have, therefore, prudently implemented a short-term gold revenue protection programme to secure and derisk the necessary cash flows, providing comfort even if the gold price were to fall to $1 000/oz.”
Project Highlights
During the past year, a thorough review of the Houndé project was completed and an implementation plan was established. The mining and ore processing schedules have remained unchanged since February last year, while the operating and capital costs were fully scoped and improved by Endeavour, with assistance from Australia-based engineering and project management consultancy Lycopodium Minerals.
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