Mr. John Dorward reports
ROXGOLD DELIVERS ROBUST PEA FOR THE SEGUELA GOLD PROJECT WITH AFTER-TAX NPV OF $268 MILLION AND 66% IRR
Roxgold Inc. has released the results of a preliminary economic assessment (PEA) for the high-grade Seguela gold project in Ivory Coast. The PEA was prepared in accordance with Canadian Securities Administrators' National Instrument 43-101 (Standards of Disclosure for Mineral Projects). The PEA provides a base-case assessment of developing the Antenna, Ancien, Agouti and Boulder deposits as open-pit mines, feeding a central gold processing facility. Roxgold expects to continue its evaluation of Seguela with the intent of expanding the resource base and advancing to the feasibility stage.
Seguela plan infrastructure
A webcast and conference call to discuss the PEA results will be held on April 15, 2019, at 8 a.m. Eastern Time -- details of the call are outlined in the Seguela gold project PEA conference call section herein.
Key highlights
(all financial results are in U.S. dollars unless otherwise noted)
Production:
-
Life-of-mine (LOM) gold production of 841,000 ounces with average annual gold production of 103,000 ounces;
-
Average annual gold production of 143,000 ounces over the first three years of production, with an estimated production peak of 154,000 ounces in year three.
Costs:
-
Average cash costs (1) of $605 per ounce over the LOM, including a cash cost of $475 per ounce over the first three years of production;
-
Average all-in sustaining costs (AISC) (1) of $749 per ounce over the LOM, including an AISC of $600 per ounce over the first three years of production.
Development capital:
-
Estimated preproduction capital cost of $142-million (including a $20-million contingency);
-
Conventional processing plant with a processing rate of 1.25 million tonnes per year with scalability incorporated into plant design for potential expansion.
Financial:
-
LOM after-tax net cash flow of $354-million at a gold price of $1,450 per ounce;
-
Project payback of 1.2 years;
-
Robust economics with net present value (NPV) and internal rate of return (IRR) as set out in the attached NPV and IRR table.
NPV AND IRR
Metric Base case at $1,450/oz Au Spot price at $1,73/oz Au
NPV 5% after tax -- attributable to Roxgold's 90% interest $268-million $379-million
After-tax IRR 66% 88%
John Dorward, president and chief executive officer, commented: "The PEA illustrates the substantial value accretion of the Seguela gold project, which stands alongside our current operations to build the foundation for Roxgold and its future. We acquired Seguela in April, 2019, for $20-million and, through the hard work of our exploration and project team, have been able to generate exceptional prospective project economics with an after-tax NPV attributable to Roxgold of $268-million and an IRR of 66 per cent at a gold price of $1,450 per oz. In the first three years of operation, the project will produce an average of 143,000 ounces of gold per year at an AISC of $600 per ounce, ensuring a payback period of only 1.2 years.
"Importantly, this assessment is just a snapshot of the potential value of Seguela. Our exploration program has returned material intersections from five of the first seven targets identified, with an additional 21 targets on the property yet to be tested. It is our belief that, with continued drilling success, there is the potential to add significant production ounces and value to the project. Additionally, we have identified several opportunities to expand and optimize the PEA, which we intend to evaluate as we proceed towards a feasibility study, which is well under way and with an anticipated completion in the first half of 2021."
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
PEA SUMMARY
Metrics Units Results
Life of mine years 8.2
Total mineralized material mined tonnes 10,241,000
Contained gold in mined resource oz 890,000
Strip ratio w:o 8.1:1
Throughput tpd 3,500
Head grade g/t 2.7
Recoveries % 94.5%
Gold production
Total production over LOM oz 841,000
Annual production over LOM oz 103,000
Annual production over first three years oz 143,000
Operating costs over LOM
Mining $/t, mined $3.02
Processing $/t, processed $15.55
G&A $/t, processed $5.85
Others (incl. refining and royalties) $/t, processed $7.35
Total operating costs $/t, processed $56.30
Cash costs (1)
Average cash costs over LOM $/oz $605
Average cash costs over first three years $/oz $475
AISC (1)
Average AISC over LOM $/oz $749
Average AISC over first three years $/oz $600
Capital costs
Initial capital expenditure $M $142
Sustaining capital expenditure $M $36
NPV 5%, after tax -- attributable to Roxgold's 90% interest $M $268
After-tax IRR % 66%
Payback period years 1.2
Annual EBITDA
Average EBITDA over LOM $M $76
Average EBITDA over first three years $M $125
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Seguela gold project overview
The Seguela gold project is located approximately 240 kilometres northwest of Yamoussoukro, the political capital of Ivory Coast, and approximately 480 kilometres northwest of Abidjan, the commercial capital of the country. The Seguela property covers an area of 36,300 hectares, defined by two exploration permits. The property is generally accessible year-round by road vehicle. Bituminized national highways facilitate transport between Abidjan, Yamoussoukro and the town of Seguela (population 65,000), which is the nearest major town to the property. The project is accessible from the town of Seguela through approximately 20 kilometres of dirt roads.
Mineral resources estimate
The Seguela mineral resource used for the PEA includes the Antenna, Ancien, Agouti and Boulder deposits reported in the attached Seguela mineral resource statement summary table. Roxgold completed an updated mineral resource estimate for the Ancien deposit, based on the drill hole data cut-off of Feb. 12, 2020. The Antenna, Agouti and Boulder mineral resource estimates are unchanged since the previous reported mineral resource in the technical report entitled "NI 43-101 Technical Report, Seguela Project, Worodougou Region, Cote d'Ivoire," with an effective report date of Jan. 29, 2020, which is available on SEDAR.
The Seguela mineral resource estimate incorporates data from all reverse circulation (RC) and diamond drilling (DD) drilling prior to the cut-off, comprising 51,463 metres in 348 drill holes targeting Antenna, Ancien, Agouti and Boulder. Roxgold has completed 20,403 metres of RC and DD drilling since the acquisition of the Seguela project in April, 2019.
SEGUELA MINERAL RESOURCE STATEMENT SUMMARY
Measured Indicated Measured and indicated Inferred
Tonnes Grade Metal Tonnes Grade Metal Tonnes Grade Metal Tonnes Grade Metal
(mt) (g/t (000 (mt) (g/t (000 (mt) (g/t (000 (mt) (g/t (000
Au) oz) Au) oz) Au) oz) Au) oz)
Antenna - - - 7.1 2.3 529 7.1 2.3 529 0.9 2.2 64
Ancien - - - - - - - - - 1.3 6.1 261
Agouti - - - - - - - - - 1.3 2.6 110
Boulder - - - - - - - - - 1.9 1.2 72
--- --- --- --- --- --- --- --- --- --- --- ---
Total - - - 7.1 2.3 529 7.1 2.3 529 5.4 2.9 508
--- --- --- --- --- --- --- --- --- --- --- ---
Notes:
(1) Mineral resources are reported in accordance with National Instrument 43-101 with an effective
date of April 14, 2020, for Seguela.
(2) The Seguela mineral resources are reported on a 100-per-cent basis at a gold grade cut-off of
0.3 gram per tonne gold for Antenna and 0.5 g/t Au for the satellite deposits, based on a gold
price of $1,550 (U.S.) per ounce and constrained to MII preliminary pit shells.
(3) The identified mineral resources in the block model are classified according to the CIM
(Canadian Institute of Mining, Metallurgy and Petroleum) definitions for the measured, indicated
and inferred categories. The mineral resources are reported in situ without modifying factors
applied.
(4) The Seguela mineral resource statement was prepared under the supervision of Hans Andersen,
senior resource geologist, at Roxgold. Mr. Andersen is a qualified person as defined in NI 43-101.
(5) All figures have been rounded to reflect the relative accuracy of the estimates, and totals
may not add due to rounding.
(6) Mineral resources that are not mineral reserves do not necessarily demonstrate economic
viability.
Preliminary economic assessment
Roxgold has worked in collaboration with various consultants to prepare the PEA. The objective was to demonstrate the economic viability of developing multiple open-pit mines in proximity to a central processing facility, targeting the indicated and inferred mineral resources across multiple deposits. This news release provides a summary of the results and findings from each major area of investigation. The level of investigation for each of these areas is consistent with that normally expected with preliminary economic assessments for mineral resource development projects. An NI 43-101 technical report prepared by Roxgold will be filed on SEDAR within 45 days of this news release, providing further detail, including exploration, geological modelling, mineral resource estimation, mine design, process design, infrastructure design, environmental management, capital and operating costs, and economic analysis.
The financial analysis performed from the results of this PEA demonstrates the economic viability of the proposed Seguela gold project, using the base-case assumptions considered. This results in an after-tax net present value cash flow at a 5-per-cent discount rate of $268-million (attributable to Roxgold's 90-per-cent interest) and an after-tax IRR of 66 per cent. Also considered are opportunities to further strengthen and enhance the project's economic foundation. Seguela has become the company's highest priority initiative, and considering the outstanding potential economics, the project is advancing to the next phase and the definition of a feasibility study, as well as continued drilling designed to expand the size of the existing mineral resource base and test new targets.
Seguela plan of infrastructure
Mining and recovery methods
Mining
The Seguela gold project will consist of the simultaneous exploitation of the Antenna deposit and its satellite deposits: Ancien, Agouti and Boulder. The overall strategy is to have production from these satellite deposits complement the production from Antenna to achieve a total production rate of 1.25 million tonnes per annum. The project mine life contemplated in the PEA is eight years.
Mining activities at Seguela will utilize conventional open-pit mining methods. Drill and blasting are planned for oxide and fresh mineralized material, followed by conventional truck-and-shovel operations within the pits for the movement of mineralized material and waste. Two 125-tonne excavators, complemented with two 65-tonne excavators in the latter stages of the satellite pits, with an estimated total material productive capacity of approximately 8.0 million tonnes per annum, will have sufficient capacity to allow for maintenance, transport between the pits and makeup capacity to account for low productivity periods, such as high rainfall events. A fleet of up to nine Caterpillar 777 trucks (payload of 100 t) will be used in conjunction with several smaller articulated trucks for the latter stages of the satellite pits to truck and haul all mineralized and waste material. Roxgold will engage a mining contractor for the mining of all the deposits over the mine life, several of which provided quotes that were incorporated in the mining cost assumptions in the PEA. A common pool of equipment will be used and scheduled across all active pits so that movement between the pits is minimized.
Run-of-mine (ROM) mineralized material will be trucked from the pit to the ROM pad and dumped either onto the ROM pad to be reclaimed and loaded to the ROM bin or by direct tipping. The PEA contemplates a single-stage primary crush/SAG (semi-autogenous grinding) milling comminution circuit, where the mineralized material will be drawn from the ROM bin through an apron feeder and scalped through a vibrating grizzly, with the undersize reporting directly to the discharge conveyor and the oversize reporting to a primary jaw crusher for further size reduction. All crushed and scalped material will by conveyed to a surge bin. Crushed mineralized material and water will be fed to the mill.
Processing
The mill will operate in closed circuit with hydrocyclones, with cyclone underflow reporting to the mill feed. A portion of the cyclone underflow slurry will be fed to the gravity circuit for recovery of gravity gold. The gravity concentrator tailings will flow to the cyclone feed hopper, while the gravity concentrate will report to an intensive leach circuit. Gold in solution will be recovered in a dedicated electrowinning system.
Screened cyclone overflow will be thickened prior to the carbon-in-leach (CIL) circuit. Loaded carbon drawn from the CIL circuit will be stripped by the Zadra method. The resultant gold in solution will be recovered by electrowinning. Recovered gold from the cathodes will be filtered, dried and smelted in a furnace to dore bars.
The PEA assumes a forecast gold recovery rate of 94.5 per cent for the life of the production plan.
Selected operating and production statistics from the PEA are presented in the attached estimated pea annual operating statistics table.
ESTIMATED PEA ANNUAL OPERATING STATISTICS
Units Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Tonnes mined kt 698 9,956 14,353 14,734 16,098 12,327 9,787 8,955 6,624 0
Tonnes milled kt - 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 241
Head grade g/t - 3.76 3.48 4.05 2.49 1.90 2.20 2.22 1.73 1.73
Recovery % - 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5% 94.5%
Gold production koz - 143 132 154 95 72 84 84 66 13
Units LOM
Tonnes mined kt 93,531
Tonnes milled kt 10,241
Head grade g/t 2.70
Recovery % 94.5%
Gold production koz 841
Metallurgy
Metallurgical testing was performed at the ALS metallurgy laboratory in Perth, Western Australia, under the supervision of Roxgold. A significant amount of testing was performed on the Antenna deposit, which is mineralogically representative of the other satellite deposits while hosting the majority of the project's mineral resource and will account for the majority of mill feed material in the first five years of operation. In addition to the Antenna deposit, a comprehensive testwork program targeting recovery variability on the satellite deposits (Ancien, Agouti and Boulder) was conducted. The key results are summarized in the attached key results from the Antenna metallurgical testwork program table.
The testwork included the following:
-
Comminution testwork, including:
-
Bond impact crushing work index (CWi) determination;
-
SMC testwork;
-
Bond abrasion index (Ai) determination;
-
Bond rod mill work index (RWi) determination;
-
Bond ball mill work index (BWi) determination;
-
Head assays;
-
Mineralogical analysis;
-
Grind establishment testwork;
-
Gravity gold recovery and cyanide leach testwork;
-
Flotation testwork.
KEY RESULTS FROM THE ANTENNA METALLURGICAL TESTWORK PROGRAM
Test Range of results Average result
Calculated head assay (g/t Au) 1.62 g/t Au-10.3 g/t Au 3.1 g/t
Overall gold extraction (%) 92.0%-97.1% 94.5%
Gravity gold recovery (%) 28%-60% 38%
Cyanide consumption (kg/t) 0.09-0.30 kg/t 0.20 kg/t
Lime consumption (kg/t) 0.27 kg/t-1.96 kg/t 0.45 kg/t
Samples tested for Antenna were reasonably competent with bond rod and ball mill work indices of 22.7 kilowatt-hour per tonne and 19.7 kilowatt-hour per tonne, respectively, being amenable to a simple comminution circuit design. The mineralized material tested exhibited a degree of grind sensitivity with an optimal grind size of 75 microns being selected for all extraction testwork. The results of that program, which tested 14 separate samples from Antenna, were very encouraging, indicating potential for free milling of the mineralized material with good leach kinetics and overall extractions. The three satellite deposits returned positive results when tested at the same criteria. Overall recoveries in excess of 95 per cent with gravity recoveries averaged 40 per cent, indicating that the metallurgical characteristics of the satellite deposits are very similar to those seen at Antenna.
Taken together, Roxgold believes that with the process plant and recovery methods contemplated in the PEA, an average gold recovery of 94.5 per cent can be assumed. Further testwork will be done as part of the feasibility study phase of the project to validate and expand upon these results and process design criteria.
Tailings and power
It is intended that the CIL tails will be treated to reduce the weak acid dissociable cyanide level to an environmentally acceptable level. The tailings system will comprise two parallel tailings lines and associated tailings pumps. The tailings storage facility (TSF) will comprise a side valley storage formed by two multizoned earthfill embankments, designed to accommodate 13.0 million tonnes of tailings and built utilizing the downstream construction methodology.
A water harvesting and storage dam will be the main collection and storage pond for clean raw and process water.
The envisioned power supply is through a connection to the Ivory Coast electricity grid by a 2,400-metre tee into the 90-kilovolt power line from the Laboa to Seguela substation. The Seguela substation is fed through an existing 90-kilovolt transmission line from the 225/90-kilovolt Laboa substation. The Laboa substation is part of a 225-kilovolt ring main system around the country where various sources of generation are connected and, being a large ring main, offers a great deal of redundancy at 225 kilovolts. The grid supply from Ivory Coast is, by world standards, economically priced and much more financially favourable than other options, including self-generation, as the tariff is based on a mix of hydro and thermal generation with a large portion of hydro.
Environmental and permitting
The primary environmental approval required to develop Seguela is decreed by the Ivory Coast Environment Minister and is necessary for the issuance of the mining licence. Roxgold has contracted the consulting firm CECAF to undertake the project baseline studies and compile the environmental and social impact assessment (ESIA) required to obtain the environmental decree. The ESIA will identify the potential social and environmental impacts of the development of the project and proposed mitigation measures. Separate to the ESIA, a resettlement action plan (RAP) will be developed for any physical or economic displacement of people or communities as a result of the project's development. As there are no specific regulations or guidelines in Ivory Coast, the RAP will largely follow the guidelines specified in the International Finance Corp. (IFC) performance Standard 5 (PS5). The Seguela project does not have any permanent settlements in the project area, and as such, it is anticipated that the RAP will outline low-impact measures.
Currently, there is no permanent artisanal mining (ASM) settlement on the identified deposits or nearby, with the presence of only a few hundred of ASM miners from time to time in the project area. The implementation of a stakeholder management plan, as undertaken by the company elsewhere in the region, should enable the ASM activities in the project area to be effectively managed.
The conceptual closure plan considered in the PEA assumes the mine areas will be reclaimed to a safe and environmentally sound condition consistent with closure commitments developed during the life of the project in compliance with the national regulations and IFC standards and other best practices.
The PEA assumes that all requisite approvals and permits for the expansion will be obtained. While it is believed that such approvals and permits can be obtained on a timely basis and on acceptable terms, there is no certainty that this will be the case.
Capital cost summary
The capital required to develop Seguela is estimated to be $142-million (including $20-million contingency) with an additional $36-million of sustaining capital and $11.5-million of closure costs over the eight-year mine life. The mining production capital relates to mining activities prior to first material being delivered to the processing facility, where 301,000 tonnes of mineralized material and 397,000 tonnes of waste are mined to establish a reasonable stockpile ahead of operations commencing. All contractor mobilization and set-up are included in the preproduction capital allowance.
The processing plant capital relates to a facility with a nominal throughout of 1.25 Mtpa. The capital cost estimate is based on an engineering, procurement and construction management (EPCM) implementation approach and horizontal (discipline-based) construction contract packaging. Equipment pricing was based on actual equipment costs from other recent similar-scale Lycopodium projects and considered representative for Seguela.
The surface infrastructure includes site electrical distribution, tailings management facility, water dams and accommodation camp. A summary of estimated capital costs is presented as follows, and annual estimated capital costs are shown in the attached estimated annual sustaining capital costs table. Capital cost estimates in the PEA reflect the joint efforts of Knight Piesold Consulting, Lycopodium Ltd., CSA Global Pty. Ltd., ECG and Roxgold. Roxgold compiled the capital cost data into the overall cost estimate. The cost estimate contributions section outlines the responsibilities of each contributor to the cost estimates.
Summary of PEA development capital costs
Design and permitting: $3.0-million
Mining: $2.4-million
Processing: $74.5-million
Infrastructure and environment: $34.6-million
General and administrative: $7.4-million
Contingency: $20.3-million
Total: $142.2-million
ESTIMATED ANNUAL SUSTAINING CAPITAL COSTS
Year Units Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9
Mining $M $3.8 $0.4 $0.4 $2.6 $0.4 $0.4 $0.7 $0.4 $-
Processing $M 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.1
Infrastructure and
environment $M 3.0 2.7 2.9 2.7 2.7 3.0 2.7 0.5 0.5
Closure $M - - - - - - - - 11.5
Total $M $7.5 $3.8 $4.0 $6.0 $3.8 $4.1 $4.1 $1.6 $12.1
Cost estimate contributions
CSA Global: design and estimates for development and sustaining
capital for the open-pit mines in conjunction with
budget pricing from prospective open-pit mining contractors
Lycopodium: design and estimate for the processing plant and site access infrastructure
Knight Piesold Consulting: design and estimate for the tailings storage facility and water storage and
harvest dams
ECG: design and estimate for the site power supply/grid connection
Roxgold: owner costs and miscellaneous surface infrastructure not captured in the
scope of work of the consultant
Operating cost summary
Cash costs and AISC (all-in sustaining costs) per payable ounce of gold sold are non-generally accepted accounting principle financial measures.
Total estimated cash costs in the PEA are presented in the following PEA operating cash costs section. The mining operating costs were developed based on quotes from reputable mining contractors, with experience in West Africa, including current operating experience in Ivory Coast, and based on the mine plan for the Antenna deposit. The costs and productivity estimates have been validated against CSA Global's internal database of similar benchmarked operations in West Africa. The processing operating costs were developed from first principles and Lycopodium's database according to typical industry standards applicable to gold processing plants in West Africa. General and administration costs were factored from historical operating cost data from the development and operation of Roxgold's Yaramoko gold mine in Burkina Faso.
PEA operating cash costs
Mining: $27.56 per tonne milled
Processing: $15.55 per tonne milled
General and administrative: $5.85 per tonne milled
Refining: 29 cents per tonne milled
Total: $49.24 per tonne milled
As summarized in the attached life-of-mine all-in sustaining cost and all-in cost table, operating costs, which include mining, processing, general and administrative costs, royalties, and refining costs, total $692 per payable ounce of gold sold over the eight-year operating plan in the PEA. AISC, which includes sustaining capital, reclamation, and corporate general and administration, totals $749 per payable ounce of gold sold over the eight-year operating plan in the PEA.
LIFE-OF-MINE ALL-IN SUSTAINING COST AND ALL-IN COST
$M $/t milled $/payable oz
Operating cost
Mining $282 $27.56 $339
Processing 159 15.55 191
G&A 60 5.85 72
Refining 3 0.29 4
Subtotal, direct operating costs $504 $49.24 $605
Royalties 66 6.47 80
Social fund 6 0.59 7
Total operating costs (1) $577 $56.30 $692
------ -------- -------
Sustaining capital and reclamation
Mining $9 $0.87 $11
Processing 6 0.60 7
Infrastructure and environment 21 2.00 25
Closure 11 1.12 14
All-in sustaining cost (1) $624 $60.89 $749
------ -------- -------
Development capital cost
Design and permitting $3 $0.29 $4
Mining 2 0.24 3
Processing 75 7.28 89
Infrastructure and environment 35 3.38 42
G&A 7 0.72 9
Contingency 20 1.98 24
Capital expenditures (non-sustaining) $142 $13.88 $171
------ -------- -------
All-in cost (1) $766 $74.77 $919
------ -------- -------
Financial analysis
The Seguela gold project has been evaluated on a discounted cash flow basis. The results of the analysis show the project to be economically very robust. The pretax net present value with a 5-per-cent discount rate is $335-million and with an IRR of 74 per cent using a base gold price of $1,450 per oz. The economic analysis assumes that Roxgold will provide all development financing through intercompany loans to the mine operating entity, which will be repaid with interest from future gold sales. On this basis, over the eight-year operating mine plan outlined in the PEA, Roxgold's 90-per-cent interest in the project is expected to provide an after-tax NPV discounted at 5 per cent of $268-million and an IRR of 66 per cent at a gold price of $1,450 per oz.
The payback period is expected to be 1.2 years at a gold price of $1,450 per oz. The payback period is defined as the time after process plant start-up that is required to recover the initial expenditures incurred developing the Seguela gold project.
KEY PEA FINANCIAL ESTIMATES
Units LOM total
Gold revenue
Gold price $/oz $1,450
Gold sales 000 oz 833
Gold sales revenue $M 1,208
Operating costs
Mining $M (282)
Processing $M (159)
G&A $M (60)
Gold refining $M (3)
Total opex excluding royalties and
social fund $M (504)
Royalties $M (66)
Social fund $M (6)
Total opex including royalties and
social fund $M (577)
Capital and closure costs
Development capital $M (142)
Sustaining capital $M (36)
Closure $M (11)
Total capital and closure costs $M (189)
Project valuation
Project net cash flow, pretax $M 442
NPV 5% $M 335
IRR % 74%
Payback period years 1.1
Attributable net cash flow, after tax $M 354
NPV 5% -- attributable to Roxgold's
90% interest $M 268
IRR % 66%
Payback period years 1.2
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Note: Figures may not total exactly due to rounding.
KEY ECONOMIC ASSUMPTIONS
Unit Value
Currency USD
Gold price $/oz $1,450
Gold payable % 99.0
Mill recovery % 94.5
Base case
Discount rate % 5.0
Exchange rate
Euro to U.S. dollar 1.1065
Franc to U.S. dollar 0.0017
Royalty
$1,100/oz % 3.0
$1,300/oz % 3.5
$1,600/oz % 4.0
$2,000/oz % 5.6
>$2,000/oz % 6.0
Vendor royalties % 1.5
Social fund % 0.5
--- ------
Sensitivity analysis
The Seguela gold project contemplated in the PEA demonstrates strong economic performance across a range of variables. Estimated NPV sensitivities for key operating and economic metrics are presented in the attached after-tax NPV sensitivity table, the attached after-tax IRR sensitivity table and the attached after-tax NPV discounted at 5 per cent sensitivity table.
AFTER-TAX NPV (FOR ROXGOLD'S 90-PER-CENT INTEREST)
SENSITIVITY TO DISCOUNT RATE AND GOLD PRICE
Gold price
$1,050/oz $1,250/oz $1,450/oz $1,650/oz $1,850/oz
Discount rate 5.0% $86 $183 $268 $344 $431
7.5% $69 $157 $234 $303 $381
10.0% $54 $135 $205 $268 $339
AFTER-TAX IRR SENSITIVITY TO GOLD PRICE
Gold price
$1,050/oz $1,250/oz $1,450/oz $1,650/oz $1,850/oz
IRR 25% 47% 66% 81% 98%
AFTER-TAX NPV DISCOUNTED AT 5 PER CENT SENSITIVITY
TO CAPITAL COSTS AND OPERATING COSTS
Operating costs
-25% -10% 0% 10% 25%
Capital costs -25% $362 $320 $292 $264 $223
-10% $348 $306 $278 $250 $209
0% $338 $296 $268 $240 $199
10% $328 $286 $258 $231 $190
25% $314 $272 $244 $216 $175
Opportunities and next steps
Several potential opportunities to improve the economics of the Seguela gold project contemplated under the PEA have been identified. Examples include, but may not be limited to:
-
Seguela presents a significant opportunity to further assess multiple priority exploration targets within 15 kilometres of the envisioned central processing facility. These targets have the potential to increase the mineral resource base and enhance the potential economics of the Seguela project by adding additional ounces;
-
Exploration potential to increase the mineral resources of the Antenna, Ancien, Agouti and Boulder deposits;
-
Optimize infrastructure (for example, TSF and processing facility) designs resulting in reduced capital costs;
-
Further optimize mining strategy resulting in operating cost savings;
-
Further optimize mine designs and scheduling resulting in fully utilized contractor fleet.
Analysis of the results and findings from each major area of investigation suggests several recommendations for further investigations during the coming feasibility study to mitigate risks and improve the base-case project definition to be incorporated during the development and operation of the project, including:
-
Conduct a thorough geotechnical and hydrogeology investigation for each deposit;
-
Additional metallurgical variability testwork to confirm recovery assumptions;
-
Tender the major construction (for example, bulk earthworks and EPCM) and mining contracts to more accurately define the project costs and economics;
-
Infill drilling and conversion of mineral resources to mineral reserves;
-
Advance the ESIA, RAP and mining permit processes;
-
Continue environmental (for example, climate, noise and water quality) testing and monitoring;
-
Develop a detailed project implementation plan to precisely define the strategy that will be executed to develop the project;
-
Additional geochemical testing of the tailings and waste rock to confirm the acid rock drainage (ARD) and metal leaching (ML) potential;
-
Continue to engage effectively with all the stakeholders as the project develops;
-
Develop an approach and procedure for the land access associated with the RAP.
Given the positive financial analysis included in the PEA, the company expects to advance further exploration, study and engineering work on Seguela.
Seguela gold project PEA conference call
A webcast and conference call to discuss the Seguela PEA results will be held on April 15, 2020, at 8 a.m. Eastern Time. Listeners may access a live webcast of the conference call from the events section of the company's website or by dialling toll-free 1-844-607-4367 within North America or 1-825-312-2266 from international locations and entering passcode 8869387.
An on-line archive of the webcast will be available by accessing the company's website. A telephone replay will be available for two weeks after the call by dialling toll-free 1-800-585-8367 and entering passcode 8869387.
Note
(1)
Cash costs and AISC per payable ounce of gold sold are non-generally accepted accounting principle financial measures. All-in sustaining costs are presented as defined by the World Gold Council less corporate G&A.
Qualified persons
The scientific and technical information contained in this news release has been reviewed and approved by the following qualified persons under National Instrument 43-101:
- Paul Criddle, FAusIMM, chief operating officer for Roxgold, a qualified person within the meaning of NI 43-101, has reviewed, verified and approved the scientific and technical disclosure contained in this news release.
- The scientific and technical information contained in this document relating to Seguela's mineral resource is based on, and fairly represents, information compiled by Hans Andersen. Mr. Andersen, MAIG, is a member of the Australian Institute of Geoscientists. Mr. Andersen has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a qualified person under NI 43-101. Mr. Andersen has consented to and approved the inclusion in this document of the matters based on his compiled information in the form and context in which it appears in this document.
Both Mr. Criddle and Mr. Andersen are full-time employees of Roxgold and are not independent within the meaning of NI 43-101.
Roxgold's disclosure of mineral reserve and mineral resource information is governed by NI 43-101 under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as may be amended from time to time by the CIM. There can be no assurance that those portions of mineral resources that are not mineral reserves will ultimately be converted into mineral reserves.
The qualified persons have verified the information disclosed herein, including the sampling, preparation, security and analytical procedures underlying such information, and are not aware of any significant risks and uncertainties that could be expected to affect the reliability or confidence in the information discussed herein.
National Instrument 43-101 technical report
An NI 43-101 technical report prepared by Roxgold will be filed on SEDAR within 45 days of this news release and will be available at that time on the Roxgold website.
About Roxgold Inc.
Roxgold is a Canadian-based gold mining company with assets located in West Africa. The company owns and operates the high-grade Yaramoko gold mine located on the Hounde greenstone belt in Burkina Faso and is advancing the development and exploration of the Seguela gold project located in Ivory Coast.
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