CUTTING COSTS The decision to transition to an owner-operator mining model has been instrumental in lowering New Liberty gold mine’s cost profile
West African gold producer, developer and explorer Avesoro Resources expects its New Liberty gold mine, in Grand Cape Mount County, in Liberia, to be cash-flow positive during 2017, moving it closer to realising a low-cost production profile.
“We are seeing material results following the substantial improvements we have made across the entire operation,” says Avesoro CEO Serhan Umurhan.
The company has focused on stabilising and improving performance at New Liberty in terms of the gold mine’s mining and processing operations since its acquisition in mid-2016, while continuing to work towards reducing its cost base by taking action, including transitioning to an owner-operator mining model.
“We are extremely excited about Avesoro’s opportunity to become a premier midtier African gold producer and developer,” notes Umurhan, adding that New Liberty’s 2017 production guidance is between 90 000 oz and 100 000 oz of gold, compared with 63 556 oz in 2016.
Umurhan expects the rally in the gold price to $1 248/oz in 2016, driven chiefly by global political uncertainty, to continue this year, providing a positive environment for furthering the company’s developments in West Africa. He notes that the “anti- European Union (EU)” sentiment following Brexit (Britain’s exit from the EU) and the flurry of European elections throughout 2017, together with US President Donald Trump’s election, have increased political instability in these regions, leading many investors to turn to gold, a traditional safe haven.
With many gold districts still underexplored in West Africa and an uptick in merger and acquisition activity in the gold mining industry, Umurhan is optimistic about Aversoro’s prospects.
He also notes that a prevailing challenge across the West African mining region is delivering a low-cost production profile. However, New Liberty is starting to achieve this and he expects further improvements in the mine’s output and cost base to be realised during the year.
The decision to transition to an owner-operator mining model has been instrumental in lowering the mine’s cost profile. Previously, Umurhan explains, a third-party contractor was responsible for mining fleet maintenance at New Liberty, while Avesoro was responsible only for the operation of the fleet. However, this arrangement had the potential to lead to conflict if fleet availability was low and, in addition, Avesoro was obligated to pay high fixed costs and hourly rates for the rental assets even when they could not be used efficiently, owing to equipment breakdowns.
“We have now taken ownership of the fleet and are conducting maintenance activities in-house. “We have also combined this with additional operator training and supervision, and are seeing improved equipment availability, which, in turn, is increasing our mining rates and reducing mining unit costs.”
Avesoro has also recruited several additional experienced process plant operations staff and introduced a more proactive preventive maintenance schedule at its New Liberty processing plant. Upgrades have been made to the plant and incremental improvements have been made to the detoxification circuit and the plant’s pumps, pipes and valves to reduce downtime.
Ongoing upgrades to the tailings-storage facility will also make New Liberty more environment friendly, increasing the sustainability of the facility for long-term mine operations. Umurhan explains that the existing facility is being converted into a water-retaining facility by raising the downstream embankment of the tailings pond. The up-gradient surface water is also being diverted away from the facility and the water-reclamation system is being upgraded to reuse tailings water within the processing plant.
As Liberia’s first and largest commercial gold mine in an area that is relatively under- explored for gold, the mine’s elevated performance is expected to provide a boost for the local economy, creating jobs for the surrounding communities.