ENDEAVOUR Mining hoped to make an investment decision in early 2017 on the development of a $307m carbon-in-leach (CIL) mine at its Ity project which is situated in West Africa’s Côte d’Ivoire.
If approved, the developed mine would see average gold production of 165,000 ounces a year over the first five years, and 114,000 oz over the remainder of its 14-year life.
Ity would increase Endeavour Mining’s production about 15% on an attributable basis assuming Endeavour reaches the upper end of its 2016 financial year production guidance of 610,000 oz.
However, the company said that it was hoping to complete “ownership discussions” in order to increase on its current 55% stake in the project ahead of an investment decision.
Endeavour Mining president and CEO, Sebastien de Montessus, said in a conference call on November 10 that it might be possible to increase the firm’s stake in the project between 25% and 30%. The balance of the project would be held through a direct government stake, and Didier Drogba, the former Chelsea footballing star.
“It is always complicated … but it is safe to say that over the last weeks we have had intensive dialogue with the government of Côte d’Ivoire which is willing to let us acquire further shares in the project given the size and importance of the investment,” said De Montsessus.
He said Endeavour hoped to finalise the scale of its ownership along with the completion of a definitive feasibility study before the end of the first quarter of 2017. The project would take 20 months to build from investment decision.
The go-ahead for the project would also involve taking stock of potential improvements to the resource base through high grade extensions. The project is currently based on a gold reserve base of 1.9 million oz. It also required government approval for a mining permit.
“The Ity CIL project has the potential to be a long-life, low-cost mine with exploration upside that can add materially to our overall production and be a positive cash flow generator, while lowering our group all-in sustaining cost profile,” said De Montessus in an earlier statement.
The project will operate at an all-in sustaining cost (AISC) of $603/oz during its 14 years of life, based on current reserves. This compares well against AISC of $870 to $920/oz achieved from its current five mines in the last quarter. Endeavour mines in Mali, Côte d’Ivoire, and Ghana.
Endeavour said in a presentation published on its website in July that it intended to reach 900,000 oz/year in gold production by 2020 at an all-in cash cost of less than $800/oz.
It has already brought the Karma mine into production and is setting building Houndé, a proposed $328m mining project. Ity is so timed that the project team at Houndé would be transferred across to the project.
De Montsessus said he was confident the company was fully funded for both Houndé and Ity. “We will come out with details on financing when we take construction decision by end of the first quarter,” he said.
Asked by a shareholder if the company might consider paying dividends notwithstanding the balance sheet pressure exerted by construction of Ity so close to Houndé, De Montsessus said: “It is something that we have particularly in mind going forward”.
“We need to see an updated cash flow model from the operations at the end of the first quarter, but my intention was to come up with dividend policy once Ity is done,” he said.
“Depending on our cash flow, we will possibly bring that forward. La Mancha [a large shareholder in Endeavour Mining] has some good pressure to distribute dividends,” De Montsessus added.
