Tanzania Royalty updates PFS after government-forced review

Tanzanian Royalty Exploration (TSX: TNX; NYSE: TRX) has tabled an updated pre-feasibility study (PFS) for its Buckreef gold project in Tanzania with a reserve estimate. It replaces last year’s PFS, which the Ontario Securities Commission found was not compliant with National Instrument 43-101.

In its updated report, Tanzanian Royalty says it contracted a new company to review the 2014 original PFS. The new company “identified an immediate problem” — the original report used a test block model, not the final block model.

The updated PFS resulted in a slightly smaller resource estimate. Buckreef now contains 24.69 million measured and indicated tonnes grading 1.57 grams gold per tonne for 1.243 million oz. gold. Previously, the project contained 24.78 million measured and indicated tonnes at 1.56 grams gold for 1.246 million oz. gold.

The project now also contains 19.08 million proven and probable tonnes grading 1.54 grams gold for 943,851 oz. gold.

The PFS outlines a 1.49 million tonnes per year open pit that would produce 822,000 oz. gold over 16 years. It has a US$130.96 million after-tax net present value at a 5% discount rate and a 74% after-tax internal rate of return. The company expects payback in four years.

The project would cost an initial US$76.5 million for earth-moving equipment, a processing plant and infrastructure. The company estimates sustaining costs of US$22.95 million.

Tanzania Royalty says it intends to progress Buckreef to a feasibility study with further drilling.

Miners in Tanzania have had a contentious year with the country’s government. In March 2017, the company banned unprocessed gold and copper ore exports. Among other laws imposed over the last year, in January 2018 Tanzania declared that foreign-owned mining groups had to offer shares to the government and local companies. It also said that all miners would have to transact business through indigenous Tanzanian banks.

Shares of Tanzanian Royalty are currently valued at 52¢ with a 52-week range of 31¢ to 89¢. The company has a $65 million market capitalization.