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Canada’s Teranga Gold Corporation, listed on the TSX, has produced a positive Feasibility Study (FS) on its permitted Banfora gold project in Burkina Faso, which it acquired last year as part of its acquisition of Australia’s Gryphon Minerals. Based on initial gold reserves of 1,2 Moz, the FS’s base case demonstrates solid project economics with a 15 % internal rate of return at US$1 250 per ounce gold for a 2,4 Mt/a CIL processing facility modelled after the plant located at Teranga’s Sabodala gold operation in Senegal

The project, located in the south-west corner of Burkina Faso, comprises a mine licence of 89 km2 and a regional exploration land package of nearly 1 000 km2. It is less than 10 km from the border with Côte d’Ivoire and lies within the north-northeast trending paleo-proterozoic Birimian Senoufo Belt, which also hosts Randgold Resources’ Tongon deposit in Côte d’Ivoire.

Banfora gold plant to be modelled on Sabodala

Drilling at Banfora. Over the past year, Teranga has completed follow-up drilling across the defined deposits at Banfora to augment and validate historical drilling.

The project is 90 % owned by Teranga with the Government of Burkina Faso holding a 10 % free carried interest. It is easily accessible by road and is in close proximity to the regional town of Banfora and the major city of Bobo-Dioulasso, which has an international airport.

Under Teranga’s Mining Convention with the Government of Burkina Faso, the project benefits from fiscal stability guarantees that stabilise certain tax rates such as corporate income and customs duties in effect prior to the adoption of the 2015 Mining Code.

“Development of the Banfora project is an important step towards attaining our goal of becoming the next multi-asset, mid-tier gold producer in West Africa. It will diversify our production base and add significant scale by increasing our consolidated annual gold production by 50 % to between 300 000 and 350 000 ounces,” stated Richard Young, President and CEO of Teranga.

As detailed in the FS, the mine will have an average annual production of 119 koz over a nine-year mine life at an average all-in sustaining cost (AISC) of US$843/oz. Over the first five-and-a-half years of operation, average annual production will be somewhat higher at 131 koz (at an average mill grade of 1,88 g/t).

Teranga is currently undertaking an infill drill programme aimed at converting inferred resources to reserves. The programme is targeting inferred resources located adjacent to the current reserve pits. Overall, Teranga anticipates achieving a conversion rate of between 25 % and 50 % of the inferred resources.

“The Banfora project is off to a solid start with an initial after-tax rate of return of 15 % and economics that are anticipated to further improve once the current infill drill programme is complete and reserves are updated in the first half of 2018,” said Paul Chawrun, Chief Operating Officer of Teranga. “Additionally, we are undertaking a multi-year exploration programme covering more than a dozen regional targets. The objective of the regional programme is to identify additional deposits beyond the initial four included in the Feasibility Study to feed the central mill at Banfora.”

Mining will be by way of conventional open-pit mining techniques using drill and blast with material movement by hydraulic excavators and trucks. The project scale suits 110- to 140-tonne class excavators in a backhoe configuration matched to 50-tonne class mining haul trucks operating at 5 m bench heights. Following operating procedures similar to Sabodala, an extensive reverse circulation (RC) drill programme is planned to supplement the production blast hole sampling as part of the grade control strategy. The mine operations will emulate Sabodala, with multiple near-surface pits feeding the process plant.

The process plant will be located adjacent to the Nogbele deposit, which contains approximately 50 % of the initial reserves. The Fourkoura, Stinger, and Samavogo deposits are located 6, 15, and 25 km, respectively, from the process plant. The haul trucks selected have the ability to haul ore directly to the process plant. This is expected to reduce re-handling costs and minimise waste movement through optimised pit designs for the near-surface orebodies. Teranga will operate its own fleet.

The project is expected to benefit from lower operating costs and reduced operational risk as a result of Teranga’s experience as an owner-operator at Sabodala.

To maximise the value of the project, the primary aim of the mine schedule is to supply the processing facility with the best value material first with low-grade ore being stockpiled.

The process plant design is based on a conventional CIL gold process flowsheet consisting of primary crushing, SAG and ball milling, with a pebble crusher, CIL tanks, elution, electro-winning and gold smelting to produce doré on site. Throughput is expected to range between 2,2 and 2,5 Mt/a, depending on the blend of soft and hard ore. The average predicted plant recovery is 92 %, with soft material recoveries from some zones reaching as high as 95 %.

The design of the facility is expected to deliver optimum recovery and minimum operating costs. The key criteria for equipment selection are suitability for duty, reliability and ease of maintenance, and synergies with Sabodala, including same-sized crusher, mills, feeders and CIL tank agitators. The process selected is based on industrially proven equipment and sizing, resulting in additional operational flexibility and lower technical risk.

The tailings storage facility (TSF) will be developed as a high-density polyethylene geomembrane lined paddock-type facility in a two-cell arrangement. The TSF embankments will be constructed in annual raises to suit storage requirements, using downstream raise construction methods.

Transport and logistics for mining projects in the region are well-established with 11 mines having been built in Burkina Faso within the past decade. Goods will be containerised and transported by liner services to the ports of either Abidjan in Côte d’Ivoire or Tema in Ghana.

A construction readiness programme is underway for initial engineering, site infrastructure and preparation of large vendor packages. The engineering, procurement and construction management (EPCM) scope is currently in a tender process amongst several EPCM service providers with construction experience in West Africa and Burkina Faso. An award decision is expected shortly. Plant construction is expected to commence in Q2 2018, with the first gold pour following within approximately 18 months of the construction start date.

The company plans to replicate the first phase of the Sabodala process plant layout which is expected to lower construction and operating risk and, in turn, pre-production project capital and operating costs. The capital cost to construct the Banfora project is estimated at US$232, including processing plant, infrastructure, an owner operated mining fleet, owner’s costs, contingency, taxes and duties.

Owner’s costs have been captured in the capital estimate, including the management team, project expenses, pre-production costs, first fills, opening stocks, plant mobile equipment, project spares, vendor representatives, training and initial resettlement costs. The company has hired Metifex to form part of the owner’s team for the project. Metifex has worked on a number of projects with the Teranga management team, including most recently the mill optimisation project at Sabodala.

Pre-production capital costs exclude acquisition costs and reserve development costs incurred from acquisition through to the end of 2017. It also excludes construction readiness activities of US$12 million, which will be spent prior to major construction.

Some resettlement will be required as the project advances and Teranga says the resettlement action plan is progressing well, strongly supported by the local communities. Under the plan, approximately 500 households in several villages will be relocated over the next five years, with a further 350 households being compensated for agricultural land impact. The resettlement and livelihood restoration process for the project is being managed by an experienced team from the global sustainability firm, ERM, building on work completed under the previous project ownership.

Roscoe Postle Associates Inc prepared the resource and reserve estimates and the FS Technical Report with the assistance of a number of independent experts or firms. Lycopodium completed the process design, capital estimate and execution plan for the process facilities and associated infrastructure while Knight Piésold was responsible for the tailings management facility design, surface geotechnical engineering and site water balance. ECG Engineering provided the power supply solution, BBA/Auriflex was responsible for the metallurgical test work supporting the process design and MBS Environmental completed the ESIA summary and closure plan.

As at June 30, 2017, Teranga had cash and cash equivalents of US$80 million. The company anticipates cash flows from Sabodala of more than US$80 million over the next two years and a total of US$230 million over the next five years. With cash and cash equivalents, anticipated cash flow and indicative term sheets for a project debt facility of up to US$150 million, the company believes it is in a solid financial position to develop and fund construction of the Banfora project.

Photos courtesy of Teranga Gold Corp

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