Randgold, Nevsun team up in western Mali

With nearby projects at the feasibility stage, Randgold Resources (GOLD-Q) and Nevsun Resources (NSU-T) have reached a deal to evaluate co-operative development in the Kenieba gold belt of western Mali.

U.K.-based Randgold and Vancouver-based Nevsun hold extensive land packages in the area, near the Senegalese border, roughly 350 km west of Bamako. Randgold has just completed a feasibility study on its Loulo project, and Nevsun is updating existing feasibility work on the Tabakoto project, immediately east of Loulo, examining the economics of including the Segala gold deposit in its development of Tabakoto.

The two companies are forming a jointly managed project team under Randgold’s leadership to assess whether sharing development of the projects might help to bring both to production.

Loulo has a resource of 4.3 million tonnes grading 3.9 grams gold per tonne, which includes an open-pit reserve of 1.4 million tonnes grading 3.6 grams gold. The pit design has a stripping ratio of about 7:1. Randgold has a 2.2-million-tonne-per-year operation mapped out.

While the estimated costs (around US$12 per tonne) indicate the operation could be economic, the shortage of infrastructure in western Mali is severe, and is the principal force behind the two companies’ decision to join forces.

Nevsun’s Tabakoto project has an open-pit reserve of 3.2 million tonnes at a grade of 5.5 grams gold per tonne. Feasibility studies estimated that a 650,000-tonne-per-year operation would have a capital cost of US$24 million and produce gold at US$185 per oz.

Segala, immediately to the south, has a resource of 7.6 million tonnes grading 3.4 grams per tonne, based on the 2-gram cutoff grade used in the Tabakoto pit design. Nevsun recently finished a 1,500-metre drilling program to provide P-size (85-mm) core from representative parts of the Segala deposit for metallurgical testing. Another 200 kg of material grading between 1 and 1.5 grams gold per tonne are being sent for column-leach testing, and a further 4,000-metres drill program is under way on the Tabakoto and Segala properties.

The three deposits, plus additional resources at Loulo and on Randgold’s adjoining Yalea property, add up to about 7 million oz. gold. The Loulo-0 deposit, immediately east of the main Loulo deposit, holds 6.4 million tonnes grading 3.4 grams gold per tonne, whereas Yalea, about 5 km to the south, has 6.2 million tonnes averaging 3.9 grams per tonne. Mark Bristow, Randgold’s president, tells The Northern Miner he expects the Loulo-0 resource to be advanced to reserve status and that about half the resources on smaller satellite deposits on the property should also convert to reserves.

The companies are hoping a larger resource will justify heavy investment in infrastructure in one of West Africa’s poorest countries. Roads between the Kenieba area and Kayes, the regional centre on the Dakar-Bamako rail line, are poor and often impassable in the rainy season. Upgrading the roads and bringing power from the Manantali hydroelectric power development would be priorities in any development plan. The Malian government, which would hold a 20% interest in the producing mines, has indicated its willingness to fund some improvements in the region.