Name and Location
Houndé gold project, Burkina Faso.

Client
Houndé Gold Operation, Endeavour Mining’s Burkina Faso operating subsidiary.

Project Description
A National Instrument 43-101 compliant feasibility study completed on the Houndé project in November 2013 proved positive for an openpit gold mine. A subsequent update on the project’s resources and reserves, mine plan and project economics was completed in February 2015.

A 34% increase in the estimated mineral reserve has resulted in greater output expectations and a longer mine life. The project has proven and probable reserves of 30.6-million tonnes, with an average grade of 2.1 g/t of gold.

An expansion of the Vindaloo deposit and the inclusion of two new deposits within 14 km of the proposed plant site have resulted in the Houndé mineral reserve increasing to 2.07-million ounces.

The enlarged reserve will result in total gold production of about 1.9-million ounces over a ten-year mine life, compared with the originally estimated 1.4-million ounces over an eight-year mine life.

The processing plant consists of a three-million-tonne-a-year primary crusher with a semiautogenous/ball crushing circuit to feed a gravity/carbon-in-leach plant.

The updated mine plan defines a large-scale openpit mine that provides 29.7-million tonnes of ore at 2.15 g/t of gold and 251-million tonnes of waste for a strip ratio of 8.4:1. The processing plant comprises a three-million-tonne-a-year primary crushing with semiautogenous ball mill circuit to feed a gravity/carbon-in-leach plant. The enhanced production relative to the November 2013 feasibility study is a result of the exploration additions from 2014 and an optimisation of the mine plan to access high-grade and shallow gold mineralization during the initial years of the mine life.

Net Present Value/Internal Rate of Return
The project’s internal rate of return has increased from the previously estimated 22.4% to between 28% and 35%, with a gold price ranging from between A$1 200/oz and A$1 300/oz. The project’s net present value has been estimated at A$359-million from an initial estimate of A$230-million.

Value
The updated capital cost is estimated at $325-million (inclusive of contingency, working capital, and import duties), representing a 3.2% increase over the $315-million estimate in the November 2013 feasibility study.

Duration
Engineering, procurement and construction are estimated at between 18 to 20 months from board approval to first gold production.

Latest Developments
Amid a tumbling gold price, Endeavour might be forced to rethink how it will turn a profit from the newly built Houndé project, should the lower-price environment persist.

“We’ve always said that [a price] above $1 200/oz it is a no-brainer to start the Houndé project. Below $1 100/oz, we’ve been telling people that it would also be a no-brainer, except that we wouldn’t start it as envisioned,” Endeavour CFO Ota Hally has told Mining Weekly Online from Europe.

He states that if the low gold price persists into the New Year, Endeavour will probably be forced to delay a construction decision for Houndé and investigate opportunities to optimise it for a lower gold-price environment. “We have lots of leeway to make the construction decision and below $1 100/oz we’ll have to delay and optimise it.”

Should this be the case, future production could be impacted on, as the grades are declining at some of its older operations, such as Youga, also in Burkina Faso. Houndé is expected to produce about 180 000 oz/y of gold over eight years. Endeavour expects to increase the company's output to about 800 000 oz/y in 2018 with construction of the Houndé project.

During the third quarter, Endeavour spent more than $3-million to increase its presence at Houndé, placing senior management there and engaging with government and communities to start sensitising them, in anticipation of making a construction decision for Houndé in early 2016.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Endeavour Mining senior VP business development, Doug Reddy, tel +1 604 609 6114 or email investor@endeavourmining.com.