Endeavour Mining starts construction of its Houndé Project, its next low-cost gold mine
(Thomson Reuters ONE) -
Endeavour starts construction of its Houndé Project, its next low-cost gold mine
View News Release in PDF Format
/> Houndé to raise Endeavour's overall portfolio quality
* Average annual production of 235,000 ounces at All-In Sustaining Costs
("AISC") of $610/oz over the first 4 years
* 10 year mine life based on current reserves
* Significant exploration upside to extend mine life
* Expected to increase the Group's production to approximately 900,000 ounces
per year and lower average AISC to below $800/oz by 2018((1))
/> $328 million capex, fully funded from existing sources of capital
/> 18-month construction period with gold pour expected Q4-2017
/> 15-month Gold Revenue Protection Program implemented to increase cash flow
certainty during peak construction period
George Town, April 11, 2016 - Endeavour Mining (TSX:EDV) (OTCQX:EDVMF) is
pleased to announce that its 90%-owned Houndé Project in Burkina Faso has
entered the construction phase of its development, following approval from its
Board of Directors.
The Houndé Project is expected to deliver average production of 190,000 ounces
per year over a 10-year mine life at an AISC of US$709/oz, based on current
reserves. The project is an open pit mine with a 3.0Mtpa gravity circuit/
Carbon-In-Leach plant. The initial capital cost is estimated at $328 million,
inclusive of $47 million for the owner-mining fleet. The Project is permitted to
commence operations and early earthworks have begun.
Neil Woodyer, CEO of Endeavour, stated:
"With the ramp-up of Karma soon underway, and our operations delivering a strong
performance, we are now well positioned to build the Houndé project, which will
further lift the overall quality of our portfolio. Once in production, it will
become our flagship low-cost mine and will rank amongst West Africa's top tier
cash generating mines. Furthermore, Houndé will benefit both from our
construction track-record, demonstrated most recently at Agbaou, and our team's
operating experience in Burkina Faso.
The Project is fully-funded based on our expected pro-forma cash position
following the completion of the True Gold acquisition, the mine equipment
financing, and the undrawn portion of our revolving credit facility. However,
rather than draw on our revolving facility, our objective is to fund the
remaining capital needs from free cash flow. We have therefore prudently
implemented a short-term Gold Revenue Protection program to secure and de-risk
the necessary cash flows, providing comfort even if the gold price were to fall
to $1,000/oz."
Houndé Project Highlights
During the past year, a thorough review and optimization of the Houndé Project
was completed and an implementation plan was established. The mining and ore
processing schedules have remained unchanged since February 2015 while the
operating and capital costs were fully scoped and optimized by Endeavour, with
assistance from Lycopodium Minerals ("Lycopodium").
Table 1: Houndé Project Highlights
-------------------------------------------------------------------------------
Ownership 90% Endeavour, 10% Burkina Faso
-------------------------------------------------------------------------------
Reserve and Resources(2)
-------------------------------------------------------------------------------
P+P Reserves 31Mt at 2.1 g/t Au for 2.1Moz
M+I Resources (inclusive of reserves) 38Mt at 2.1 g/t Au for 2.5Moz
Inferred Resources 3Mt at 2.6 g/t Au for 0.3Moz
-------------------------------------------------------------------------------
Mine type Open pit
-------------------------------------------------------------------------------
Mill type Gravity / CIL plant
-------------------------------------------------------------------------------
Production
-------------------------------------------------------------------------------
Mine life 10 years
-------------------------------------------------------------------------------
Strip ratio, W:O 8.4
-------------------------------------------------------------------------------
Processing rate 3.0 Mtpa
-------------------------------------------------------------------------------
Average LOM Recovery rate 93%
-------------------------------------------------------------------------------
Total LOM gold production 1,906 koz
-------------------------------------------------------------------------------
Average annual production 190 koz
-------------------------------------------------------------------------------
Average LOM AISC $709/oz
-------------------------------------------------------------------------------
Upfront Capital $328m, inclusive of $47m for owner
mining fleet
-------------------------------------------------------------------------------
Table 2: Houndé Project Economics(3)
Gold Price (US$/oz) $1,150 $1,200 $1,250 $1,300 1,350
------------------------------------------------------------------------
After-tax Project NPV(5%) $230 $286 $342 $398 $437
------------------------------------------------------------------------
After-tax Project IRR 24% 28% 32% 36% 39%
------------------------------------------------------------------------
Payback, years(4) 2.7 2.4 2.2 2.0 1.8
------------------------------------------------------------------------
Houndé Operating Cost Optimization
As shown in the table below, AISC per ounce has remained fairly stable following
the completion of a comprehensive review and optimization of life of mine
operating costs and sustaining capital requirements.
Table 3: Operating Cost Optimizations
2015 Case(5) 2016 Optimization Change
-------------------------------------------------------------------------
Mining costs, $/t moved 2.03 2.17 +7%
-------------------------------------------------------------------------
Processing costs, $/t 14.31 13.36 (7%)
-------------------------------------------------------------------------
Site G&A costs, $m/yr 10.6 9.8 (8%)
-------------------------------------------------------------------------
LOM Sustaining capital, $m 89 77 (13%)
-------------------------------------------------------------------------
AISC, US$/oz 714 709 (1%)
-------------------------------------------------------------------------
Following cost and business risk comparisons, the "Owner Operator" option was
selected over the "Contractor Mining" approach. The fully scoped mining costs
were revised upward mainly due to increased cost assumptions for ore re-
handling, blasting and fixed cost re-allocation.
During the optimization process both the Run of Mine ("ROM") pad and the
Tailings Storage Facility ("TSF") were relocated to more favorable locations.
Furthermore, the TSF was changed from basin to paddock style to optimize the
usage of waste material and generate nearly $25 million in reclamation and
closure cost savings.
The processing costs estimate decreased due to the positive impacts of i)
reagents use optimization; ii) power demand optimizations; and iii) relocation
of the TSF, which more than offset the power costs increasing from $0.15 to
$0.18 per kWhr.
Site General and Administrative ("G&A") costs have decreased due to favorable
exchange rate variations and re-allocation of fixed labour costs into mining
costs.
Houndé Capital Costs and Project Management
The optimized and fully scoped upfront capital cost has been estimated at $328
million, inclusive of $47 million for the owner-mining fleet and $28 million for
contingencies, which is in line with the 2015 estimate of $32 million.
Table 4: Project Capital Cost Summary in US$m
-------------------------------------------------------------------------------
Mining (inclusive of $47 million for the fleet) 75
-------------------------------------------------------------------------------
Owner Project Costs 68
-------------------------------------------------------------------------------
Treatment Plant Costs 57
-------------------------------------------------------------------------------
Infrastructure (inclusive of $17 million for the 91kv overhead power line) 47
-------------------------------------------------------------------------------
EPCM Management Costs 17
-------------------------------------------------------------------------------
Owner Operation Costs 15
-------------------------------------------------------------------------------
Construction Indirect Cost 14
-------------------------------------------------------------------------------
Reagents and Services 7
-------------------------------------------------------------------------------
Sub-Total 300
-------------------------------------------------------------------------------
Contingency 28
-------------------------------------------------------------------------------
Total 328
-------------------------------------------------------------------------------
The current upfront capital cost estimate is based on power supply from Sonabel,
the national electricity utility, consisting of a 38 kilometer, 91kv overhead
power line.
Project capital commitment in 2016 is expected to be approximately $180 million,
with the remainder in 2017. Within the coming weeks, Endeavour expects to lock-
in approximately 25% of the total capital cost by placing firm orders for the
SAG and Ball mills, purchasing the mining fleet and paying land compensation and
related taxes.
Replicating its successful construction partnership at both Nzema and Agbaou,
Endeavour has awarded the EPCM contract to Lycopodium Minerals, and detailed
engineering is now commencing. Lycopodium has already had detailed involvement
in the Houndé Project, through the completion of the Detailed Feasibility Study
and the recently completed optimization reviews.
The overall duration of the Project construction is estimated to be 18 months.
Endeavour plans to self-perform 72% of the project build, while Lycopodium will
focus primarily on the processing facility which is the remaining 28% of the
total capital commitment for the project. Endeavour's Project Management Team
will include approximately 90 personnel to perform all remaining construction
tasks. Endeavour's team will also be responsible for all concrete work, which
was the successful approach employed at Agbaou.
The contingency allocation for the Houndé Project is based on evaluating the
risk level of confidence and experience of the Construction Services Team, for
every line item. This method for determining contingency is deemed to be more
realistic as opposed to applying a single, all-encompassing contingency for the
entire Project. The design of the processing plant and supporting infrastructure
for the Project has been carried out in sufficient detail to arrive at cost
estimates of appropriate accuracy of +/-10%.
Houndé Project Funding and Gold Revenue Protection Strategy
The Houndé Project is expected to be funded from internal and existing sources
of capital, as well as the planned mining equipment financing (as per Table 5).
In addition, the free cash flow generated during 2016 and 2017 from Endeavour's
five operating mines is expected to increase total financing sources to above
1.5 times the total capital cost, representing in excess of 50% financing
headroom.
Table 5: Funding Sources in US$m
--------------------------------------------------------------------------
Cash Balance (as at Dec 31, 2015) 110
--------------------------------------------------------------------------
Undrawn RCF (as at Dec 31, 2015)(6) 110
--------------------------------------------------------------------------
Proceeds from Youga Sale 20
--------------------------------------------------------------------------
La Mancha Anti-dilution Equity Investment (True Gold acquisition) 62
--------------------------------------------------------------------------
Mining Equipment financing 50
--------------------------------------------------------------------------
Total Existing Sources of Capital Excluding 2016-17 Cash Flow 352
--------------------------------------------------------------------------
Houndé Initial Capex 328
--------------------------------------------------------------------------
Endeavour's objective is to fund Houndé utilizing its free cash flow generated
over the construction period rather than accessing its Revolving Credit Facility
("RCF"). To support this funding approach it has put in place a short-term Gold
Revenue Protection Strategy consisting of Gold Option Contracts evenly spread
over a 15-month period, to increase the certainty of its upcoming free cash
flow. The Gold Option Contracts have been structured to limit Endeavour's debt
requirements even if the gold price drops to $1,000/oz.
A deferred premium collar strategy using written call options and bought put
options has been put in place for the 15-month period from April 2016 to June
2017. The program covers a total of 400,000 ounces, representing approximately
50% of Endeavour's total estimated gold production for the period. The total
premium payable for entering into this program was $9.2 million, which is
deferred and settled as monthly contracts mature.
The advantages of the Gold Option Contacts during the construction period
include:
* ~50% of production will be protected if the gold price falls below $1,200/oz
* 100% of production will benefit from gold price upswings between $1,200 and
$1,400/oz
* ~50% of production benefits from gold price upswings beyond $1,400/oz
Once the Gold Option Contracts program ends, Endeavour will return to a position
where its gold production is fully exposed to spot gold prices.
Houndé Reserves and Resources
The Vindaloo deposits represent 88% of reserve ounces and benefits from the
2003 Burkina Faso Mining Code tax rate of 17.5%, while Bouéré and Dohoun, which
make up the remainder of reserve ounces, are under the 2015 Mining Code tax rate
of 27.5%
Table 6: Houndé Project Reserves and Resources(7)
Vindaloo Deposits Bouéré Dohoun Total
-------------------------------------------------------------------------------
Mt Au koz Mt Au koz Mt Au koz Mt Au koz
g/t g/t g/t g/t
-------------------- -------------- -------------- -----------------
P&P 181 1.2 30.6 2.11 2,075
Reserves 28.3 2.00 1,822 1.1 5.20 1.90 72
M&I 189 37.9 2.09 2,551
Resources 35.7 1.98 2,276 1.1 5.37 1.2 2.35 87
Inferred 3.0 247 0.2 3.43 20 6 3.2 274
Resources 2.57 0.1 2.91 2.62
-------------------------------------------------------------------------------
Resources inclusive of Reserves, on a 100% basis as at Dec 31, 2015
Exploration Upside to Significantly Extend Houndé's Mine Life
The Houndé exploration tenement covers over 1,075km² within Burkina Faso's
highly prospective Birimian belt. However, in light of the Project's already
robust economics, limited exploration has been done over the past years, aside
from the short 2014 drilling campaign which outlined the Bouéré and Dohoun
deposits and resulted in a 34% increase in Mineral Reserves to 2.1 million
ounces.
Historically, exploration focused mainly on the Vindaloo trends, however at
least 15 significant targets located within 20km of the planned mill that have
been identified by previous limited drilling campaigns. Most of these targets
are untested and Endeavour expects to explore high grade targets of greater than
5 g/t as its priority.
The Houndé long-term exploration strategy is currently being integrated in
Endeavour's ongoing exploration strategic review.
Community and Social Responsibility Actions
Endeavour recognizes that an active CSR program is the foundation of long-term
success. As such, it established a dedicated Houndé Project Safety, Occupational
Health and Environment department and hosted a significant amount of stakeholder
meetings. Endeavour has also launched community development programs including
livelihood restoration and community derived micro-project initiatives, and is
currently reviewing its extensive Human Resources database to promote local
employment.
The Project continues to benefit from strong stakeholder support. The Provincial
Resettlement Committee, which was set up two years ago, re-validated and
approved the resettlement plans at the end of February and the compensation
process began shortly after, in April 2016.
Conference call and live webcast
Management will host a conference call and live webcast on April 11, 2016, at
11:30am Toronto time (EST), 4.30pm London time (GMT); 5.30pm Paris time (CET),
to discuss the Houndé Project.
The live webcast can be accessed through the following link:
http://edge.media-server.com/m/p/tzxdg664
Analysts and interested investors are also invited to participate and ask
questions using the dial-in numbers below:
International: +1 212 444 0895
North American toll-free: 1 877 280 2342
UK toll-free: 0800 279 4992
Australian toll-free: 1 800 040 158
Confirmation code: 249724
A replay of the conference call and webcast will be available on Endeavour's
website.
Contact Information
Vincent Benoit DFH Public Affairs in Toronto
EVP - Strategy & Business Development John Vincic
+33 (0)1 70 38 36 96 (416) 206-0118 x.224
vbenoit(at)endeavourmining.com jvincic(at)dfhpublicaffairs.com
Martino De Ciccio Brunswick Group LLP in London
VP - Strategy & Investor Relations Carole Cable, Partner
+33 (0)1 70 38 36 95 +44 7974 982 458
mdeciccio(at)endeavourmining.com ccable(at)brunswickgroup.com
Qualified Persons and Technical Note
Adriaan "Attie" Roux, Pr.Sci.Nat, Endeavour's Chief Operating Officer, is a
Qualified Person under NI 43-101, and has reviewed and approved the operational
analysis, operating and capital estimates, and other technical information in
this news release.
M. Zammit MAIG (Cube Consulting) is an independent Qualified Person for the
Vindaloo mineral resources. Kevin Harris CPG (Endeavour) is a Qualified Person
for the Bouéré and Dohoun mineral resources. R.M. Cheyne FAusIMM (Orelogy) is an
independent Qualified Person for the Vindaloo mineral reserves and the overall
mining schedule. Michael Alyoshin MAusIMM CP Min (Endeavour) is a Qualified
Person for the Bouéré and Dohoun mineral reserves. Most recent filed report is
"Houndé Gold Project - Burkina Faso, Feasibility Study NI 43-101 Technical
Report" effective date October 31, 2013, prepared by M. Zammit MAIG (Cube
Consulting), M. Warren MIEAust CPEng (Lycopodium), R.M. Cheyne FAusIMM
(ORELOGY), D. Morgan CPEng (Knight Piésold), P. O'Bryan MAusIMM (CP) (Peter
O'Bryan and Associates).
The Houndé Mineral Resource has been estimated using a gold price of Us$1,500/oz
and a lower cut-off grade 0.5 g/t Au. The Houndé Mineral Reserve has been
estimated using a gold price of Us$1,300/oz and a lower cut-off grade between
0.4 and 0.8 g/t Au, varying by distance from deposit to the mill and ore type.
About Endeavour Mining Corporation
Endeavour Mining is a TSX-listed intermediate gold mining company which operates
4 West African mines in Côte d'Ivoire, Mali, and Ghana. In 2016, it expects to
produce between 535,000 and 560,000 ounces at an all-in sustaining cost of
US$870 to US$920 per ounce, after adjustment of the recent Youga sale and
excluding the Karma mine (where the transaction with True Gold is expected to
close at the end of April 2016). Endeavour Mining is focused on effectively
managing its existing assets to maximize cash flow as well as pursuing organic
and strategic growth opportunities that benefit from its management and
operational expertise.
Endeavour Mining | Executive Office | Bureau 76, 7 Boulevard des Moulins,
Monaco 98000
This news release contains "forward-looking statements" including but not
limited to, statements with respect to Endeavour's plans and operating
performance, the estimation of mineral reserves and resources, the timing and
amount of estimated future production, costs of future production, future
capital expenditures, future financing sources, and the success of exploration
activities. Generally, these forward-looking statements can be identified by the
use of forward-looking terminology such as "expects", "expected", "budgeted",
"forecasts" and "anticipates". Forward-looking statements, while based on
management's best estimates and assumptions, are subject to risks and
uncertainties that may cause actual results to be materially different from
those expressed or implied by such forward-looking statements, including but not
limited to: risks related to the successful integration of acquisitions; risks
related to international operations; risks related to general economic
conditions and credit availability, actual results of current exploration
activities, unanticipated reclamation expenses; changes in project parameters as
plans continue to be refined; fluctuations in prices of metals including gold;
fluctuations in foreign currency exchange rates, increases in market prices of
mining consumables, possible variations in ore reserves, grade or recovery
rates; failure of plant, equipment or processes to operate as anticipated;
accidents, labour disputes, title disputes, claims and limitations on insurance
coverage and other risks of the mining industry; delays in the completion of
development or construction activities, changes in national and local government
regulation of mining operations, tax rules and regulations, and political and
economic developments in countries in which Endeavour operates. Although
Endeavour has attempted to identify important factors that could cause actual
results to differ materially from those contained in forward-looking statements,
there may be other factors that cause results not to be as anticipated,
estimated or intended. There can be no assurance that such statements will prove
to be accurate, as actual results and future events could differ materially from
those anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements. Please refer to Endeavour's most
recent Annual Information Form filed under its profile at www.sedar.com for
further information respecting the risks affecting Endeavour and its business.
AISC, all-in sustaining costs at the mine level, cash costs, operating EBITDA,
all-in sustaining margin, free cash flow, net free cash flow, free cash flow per
share, net debt, and adjusted earnings are non-GAAP financial performance
measures with no standard meaning under IFRS, further discussed in the section
Non-GAAP Measures in the most recently filed Management Discussion and Analysis
for the year ended December 31, 2015.
Appendix 1: Mine Plan Based on Reserves
+-----------------+-------------------------------------------------------------------+-------+
| Year | 1 2 3 4 5 6 7 8 9 10 | Total |
+-----------------+-------------------------------------------------------------------+-------+
|Mining | | |
| | | |
|Ore mined kt | 3,537 2,875 2,853 5,133 3,079 3,018 1,501 7,727 0 0| 29,723|
| | | |
|Waste kt |27,101 29,125 29,147 17,813 38,618 38,893 37,774 32,432 0 0|250,903|
|mined | | |
| +-------------------------------------------------------------------+-------+
|Total kt |30,638 32,000 32,000 22,946 41,697 41,911 39,275 40,159 0 0|280,626|
|mined | | |
| | | |
|Strip ratio | 7.7 10.1 10.2 3.5 12.5 12.9 25.2 4.2 0.0 0.0| 8.4|
|ratio | | |
| | | |
| | | |
| | | |
|Processing | | |
| | | |
|Ore kt | 3,000 2,997 3,000 3,000 3,000 3,000 3,000 2,979 3,000 2,748| 29,723|
|processed | | |
| | | |
|Feed grade g/t | 2.92 2.68 2.59 2.44 1.92 2.46 1.39 2.41 1.36 1.29| 2.15|
| | | |
|Contained koz | 282 258 250 235 185 237 134 231 131 114| 2,057|
|gold | | |
| | | |
|Recovery % | 94% 90% 89% 93% 95% 94% 92% 94% 95% 94%| 93%|
| | | |
|Recovered koz | 265 231 223 219 176 222 123 217 124 108| 1,906|
|gold | | |
| | | |
|AISC US$/oz| 506 645 662 648 1,007 773 1,239 755 495 497| 709|
+-----------------+-------------------------------------------------------------------+-------+
Appendix 2: Updated Site Layout
Appendix 3: Houndé Exploration Targets
--------------------------------------------------------------------------------
[1] Including the Karma mine, assuming a successful completion of the True Gold
acquisition as announced on March 4, 2016.
[2] Full details and notes provided in Endeavour's February 29th, 2016, press
release entitled "Endeavour Mining Increases P&P Reserves and M&I Resources by
32% and 39%, respectively" available on the Company's website.
[3] Based on 100% equity funding and equipment lease financing
[4] Payback period calculated starting from production start
[5] In February 2015, Endeavour updated the Houndé Project economics following
an increase in Mineral Reserves. In this update, operating unit costs for mining
($/t mined), processing ($/t processed), site G&A costs, and sustaining capital
were unchanged from the November 2013 Feasibility Study.
[6] RCF of US$350 million, maturity date March 2020, semi-annual reductions
commencing September 2018, annual interest based on LIBOR + a 3.75% to 5.75%
margin
[7] Full details and notes provided in Endeavour's February 29th, 2016, press
release entitled "Endeavour Mining Increases P&P Reserves and M&I Resources by
32% and 39%, respectively" available on the Company's website. Totals may vary
slightly due to rounding.
Updated Site Layout:
http://hugin.info/171882/R/2002257/738874.jpg
Houndé Exploration Targets:
http://hugin.info/171882/R/2002257/738875.jpg
View News Release in PDF Format:
http://hugin.info/171882/R/2002257/738873.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Endeavour Mining Corporation via GlobeNewswire
[HUG#2002257]
Unternehmensinformation / Kurzprofil:
Datum: 11.04.2016 - 14:59 Uhr
Sprache: Deutsch
News-ID 463096
Anzahl Zeichen: 34194
contact information:
Town:
George Town, Grand Cayman
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 224 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Endeavour Mining starts construction of its Houndé Project, its next low-cost gold mine"
steht unter der journalistisch-redaktionellen Verantwortung von
Endeavour Mining Corporation (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
