ENDEAVOUR Mining said it had closed the sale of its 90% interest in the Ghana mine, Nzema, a transaction first announced in August. The firm had received $39.5m from buyer, BCM International, a mining and civil works contracting company, with further payments on reaching milestones due this year and in 2019 up to the consideration of $65m.
As a result of the proposed transaction, Endeavour dropped full-year production guidance for its 2017 financial year by about 100,000 ounces to between 500,000 to 530,000 ounces. The mine was deemed non-core.
Endeavour operates six mines, excluding Nzema, two in each of Mali, Burkina Faso and Côte d’Ivoire. It has an aspirational production target of 900,000 oz/year by the 2019 financial year from 462,000 oz/year in its 2014 financial year when it was producing gold at an all-in sustaining cost (AISC) of $1,010/oz.
Following the sale of Nzema, Endeavour expects to take AISC down to between $855 to $900/oz from previous guidance of $860 to $905/oz. The benefit of selling the high cost mine was partially offset by corporate and sustaining exploration costs which would be allocated over a lower number of ounces at group level, it said.
In September, Endeavour announced it had given the green light to its Ity expansion project in Côte d’Ivoire following exploration work and by leveraging skills and synergies within the group’s portfolio of mines: Agbaou, Houndé and Ity.
The project, which will add Carbon-In-Leach (CIL) gold extraction to the current heap leach process at Ity, will have higher average gold output numbers over both the first five and ten years owing to a one million ounce increase in reserves to 2.9 million oz. The Ity CIL project will cost $412m to develop over 20 months with first gold to be poured in mid-2019. Funding will be from existing facilities and cash generated internally.
“Its average annual production in the first five years of 235,000 oz with all-in sustaining costs (AISC) below $500/oz and an after-tax internal rate of return of more than 20%, even at a low gold price of $1,000 per ounce, are proof of the compelling economics of the project,” said Sébastien de Montessus, president and CEO of Endeavour Mining.
