Aim-listed Hummingbird Resources says TSX-V-listed Pasofino Gold has released an independent preliminary economic assessment (PEA) for the Dugbe gold project, which shows significant production potential – establishing the foundation for a new gold district.
The PEA has been prepared by DRA Projects, a wholly owned subsidiary of DRA Global as lead consultant and assisted by SRK Consulting and Epoch Resources.
Pasofino has an earn-in agreement for a 49% stake in the project, with Hummingbird maintaining a controlling interest of 51%.
The PEA sets out a five-million-tonne-a-year operation producing about 2.5-million ounces of gold over a 14-year life-of-mine (LoM).
Steady-state average yearly gold production is estimated at about 188 000 oz, with peak production of about 226 000 oz in year eight of operation.
The PEA shows a pre-tax net present value (NPV) of $825-million and a 34% internal rate of return at a gold price of $1 600/oz .
There is also a pre-tax NPV of $1.15-billion at a gold price of $1 800/oz.
The PEA highlights a fast capital payback of about 2.9 years from start of production.
LoM cash flows are expected to be $627-million and LoM all-in sustaining costs at $893/oz.
The PEA shows low power costs of $0.18/kWh, with opportunities for long-term savings with alternative sources.
Moreover, it indicates significant community support built over a ten-year-plus history of the project.
Pre-production capital of about $391-million is required to develop the project.
Much of the 2 599 km2 land package is prospective. Pasofino has new drill targets in the pipeline following intensive surface exploration work undertaken over the last six months.
Ongoing positive drilling results at Dugbe F and Tuzon will be included into the updated mineral resource estimates planned for July and August.
Current test work is under way at ALS Perth, in Australia, which is looking to improve metallurgical recoveries.
“We have always believed in the fundamental value of the Dugbe project and the huge, district-scale exploration potential.
“The recently released, positive drilling results at the Dugbe F and Tuzon deposits highlight the ongoing exploration potential, as well as Pasofino’s robust PEA, with a more than $800-million NPV and upside potential as exploration drilling takes place.
"This PEA highlights the material value and potential of the project and its ability to not only be the mine we have long envisaged but also to become the next gold district in West Africa,” Hummingbird CEO Dan Betts says.