TSX-V-listed Pasofino Gold has filed its feasibility study for the Dugbe gold project, in Liberia, on Canada’s System for Electronic Document Analysis and Retrieval.
ASX-listed Hummingbird has a controlling interest in Dugbe, which is being developed by Pasofino through an earn-in agreement. The feasibility study results for Dugbe show 2.76-million ounces in reserves and strong economics, such as a 3.5-year capital expenditure payback period once in production, and a 14-year life-of-mine (LoM) at a low all-in sustaining cost (AISC) profile of $1 005/oz.
Now that the option exercise conditions have been satisfied, Pasofino may, within 120 days from August 1, deliver the option satisfaction notice to Hummingbird.
Pasofino would then, pursuant to the earn-in agreement, acquire its 49% interest in the Dugbe project – prior to the issuance of the government of Liberia's 10% carried interest.
Following Pasofino's acquisition of its 49% interest in the project, both companies will have the right to exercise the option to consolidate ownership by converting Hummingbird's 51% ownership of Dugbe for a 51% shareholding in Pasofino, so that Pasofino would end up owning 100% of the project – prior to the government of Liberia's 10% carried interest.
A strategic review of options to best realise the maximum value of the project for all stakeholders is underway, Hummingbird said.
"We are excited by the results of the study and the huge potential of the Dugbe project … The 2 500 km land package along the Dugbe shear zone has huge exploration potential above and beyond this study.
“Hummingbird and Pasofino are now working closely together to review the strategic options for the Dugbe project with the goal to realise long-term value for our stakeholders," Hummingbird CEO Dan Betts said.
The study showed that the planned mine would have a throughput of five-million tonnes a year for a potential LoM of 14 years, with an estimated head grade of 1.30 g/t. Average yearly production would be about 200 000 oz for the first five years with an LoM average of 172 000 oz.
The mine would feature an average estimated recovery of 83% for the combined Tuzon and Dugbe F pits, with a start-up capital cost of $435-million. The net present value after tax would be 5% of $524-million for a gold price of $1 700/oz.
The LoM AISC would amount to $1 005/oz, with an internal rate of return after tax of 23.6% and a 3.3-year payback period. The mineral reserve estimate (MRE) has 66-million tonnes at a grade of 1.30 g/t of gold, with a total of 2 760 000 oz. Meanwhile, the LoM strip ratio would be 4.02.
"We are pleased to advance to this stage, satisfying the requirements to earn our initial 49% interest in the Dugbe project. As we continue in our partnership with Hummingbird, we look forward to jointly exploring strategic opportunities and generating maximum value for each of our stakeholders," Pasofino chairperson Krisztian Toth said.
The 2 559 km2 Dugbe gold project is situated within the south-western corner of the Birimian Supergroup, which is host to the majority of West African gold deposits.
Two deposits have been identified on the project: Dugbe F and Tuzon, which were discovered by Hummingbird in 2009 and 2011, respectively. The deposits are located within 4 km of the Dugbe shear zone, which is thought to have played a role in large scale gold mineralisation in the area.
A large amount of exploration in the area was conducted by Hummingbird up to 2012, including 74 497 m of diamond coring. Pasofino drilled an additional 14 584 m at Tuzon and Dugbe last year. Both deposits have MREs dated November 17, 2021. Following the completion of the DFS in June, an MRE was declared, based on the openpit mining of both deposits over a 14-year LoM.
In addition, there are many gold prospects within the project, including the Bukon Jedeh area acquired in late 2020. Here, artisanal mining has extracted gold since the 1930s, including from currently active openpits more than 20 m deep, working fresh-bedrock.
At the DSZ target on the Tuzon-Sackor trend, Pasofino has discovered a broad zone of surface gold mineralisation in trenches and outcropping along strike from Tuzon. At this and several of the other prospects, no drilling has been carried out yet.
In 2019, Hummingbird signed a 25-year mineral development agreement (MDA) with the government of Liberia to provide the necessary long-term framework and stabilisation of taxes and duties.
Under the terms of the MDA, the royalty rate on gold production is 3%, the income tax rate payable is 25% – with credit given for historic exploration expenditures – the fuel duty is reduced by 50%, and the Liberian government is granted a free carried interest of 10% in the project.