The life-of-mine (LoM) plan for exploration company Perseus Mining’s Edikan gold mine, in Ghana, has been updated to include enhanced cash flows and a reduction in the required capital expenditure, compared with the 2015 LoM plan.
Perseus Mining MD and CEO Jeff Quartermaine says Edikan’s updated LoM plan forecasts an improved operating cost profile for the reaming years of the mine’s life. It also represents a reduction in required capital expenditure, which is a “major strengthening in the outlook of Perseus Group”.
“The reshaped forecast cash flow profile from Edikan materially enhances our capacity to finance our project pipeline, which will be developed as part of the company’s corporate strategy of transforming from a single-mine, single-country company to a multimine, geopolitically diverse midtier gold producer,” he states.
Having recently completed the acquisition of Amara Mining, which includes the Yaouré gold project and the Baomahun gold project, Quartermaine says Perseus has upgraded the quality of its asset portfolio and are positioned for material growth in production, cash flow and earnings in the short to medium term.
“The updated LoM plan for Edikan underpins this compelling growth story which now relies on our ability to successfully execute all phases of our plan. This is the key focus of Perseus’s management team and we are looking forward to delivering strong returns for our shareholders,” he says.
The updated LoM plan for Edikan involves mining and processing of ore from six openpits, which is based on enhancement, design and scheduling using a gold price of $1 200/oz, and input parameters based on Perseus’s operating experience including costs from recently contracted supply.
With the aim of increasing the return on funds employed at Edikan, the mining sequence of the pits has been enhanced and rescheduled, excluding the Esuajah South ore reserve. The result of this rescheduling is that the gold production profile from Edikan remains strong and the net present value of cash flow has not been materially altered by the omission of Esuajah South from the mining schedule.
The rescheduling also ensures that mining and processing will be maintained at a seven-million-ton-a-year throughput rate, and that the exclusion of the Esuajah South deposit does not affect Edikan’s production profile in the next five years.
Although the change to the LoM plan reduces the production forecast for the final two years of the mine life, Perseus states that it will endeavour to improve its forecasts through further exploration on the Edikan mining leases and adjoining prospecting licences, as well as by the potential re-inclusion of Esuajah South – possibly as an underground mine – into the LoM plan.
Further, the updated LoM plan results in a total of 1 887 000 oz of gold being contained in the ore delivered to the mill during the remainder of its life, which includes a partial eighth year of production. This is within 2% of the previous version of the LoM plan.
Perseus assumes, with a LoM recovery factor of 88.1%, 1 663 000 oz of gold will be recovered during the remaining years of the mine. The miner says this compares “favourably” with the prior forecast of 1 735 000 oz, notwithstanding the omission of the Esuajah South deposit from the LoM plan.
Operational Efficiency
Meanwhile, over the past three years, Perseus has undertaken a series of upgrade works to improve operating efficiencies at Edikan, with the process continuing through the 2016 calendar year (CY2016). These works are expected to be completed in the December 2016 quarter and will enhance Perseus’s ability to deliver the updated LoM plan.
During CY2016, Perseus expects to invest about $7.6-million on improvement works in and around the processing plant. This includes upgrades to the conveyor belts, crushing circuit and screens.