Orca tables feasibility study for Block 14 in Sudan

Orca Gold (TSXV: ORG; US-OTC: CANWF) has tabled a feasibility study for its Block 14 gold project in northern Sudan, and with it the project’s first reserve estimate.

At a US$1,250 gold price, the project has a US$403-million, after-tax net present value at a 5% discount rate and a 24.2% after-tax internal rate of return. The gold price is US$1,219 per ounce.

According to the study, the project will require US$328 million in pre-production capital and US$181 million in sustaining capital, with payback in just under four years. The single most expensive part of pre-production is the processing plant, which the study says will cost US$164 million. The company is discussing potential tax concessions with the Sudanese government that could lower the payback period.

Orca envisions Block 14 as a conventional truck-and-shovel open pit operation. It says Block 14 would produce 167,000 oz. gold per year over 13.6 years, including a higher rate during its first seven years of 5.8 million tonnes grading 1.49 grams gold per tonne for 228,000 oz. gold per year. It wants to mine at an average rate of 22 million tonnes per year over eight years, stockpiling low-grade ore for the last 6.6 years of the mine’s life, while processing higher-grade ore during the first seven years of the mine’s life.

The company has secured water rights and submitted environmental studies for review.

Artisanal miners work alongside Orca Gold at the Block 14 gold property in Sudan in 2017. Photo by Richard Quarisa.

During a conference call, Orca CEO Richard Clark said the company expects approval “any day.” He anticipates the company will have all its permits by the end of 2019’s first quarter.

“The biggest challenge that I think that we have in the market for this project is perception,” Clark said. “When we mention this project to people, their first reaction is ‘Oh my God, Sudan.’ We’ve been all over the world and built projects in all sorts of difficult places including and in particular Africa, and I can tell you that operating in Sudan is probably one of the best operating experiences we’ve had.”

Although the U.S. government lifted economic sanctions against Sudan in October 2017, Sudan remains on its list of state-sponsored terrorism. Orca says the U.S. could remove Sudan from that list in the next six months. Earlier in November 2018, reports indicated the two countries had agreed to begin formal negotiations to remove Sudan from the list.

According to the study, Block 14 will average US$707 per oz. gold life-of-mine cash costs and US$783 per oz. gold life-of-mine all-in sustaining costs. During the mine’s first seven years, the study says it will average US$689 per oz. gold cash costs and US$789 per oz. all-in sustaining costs.

The study also has the first reserve estimate for Block 14. As of Nov. 7, the project has 79.94 million probable tonnes grading 1.11 grams gold for 2.85 million oz. gold.

A similar-scale resource estimate tabled in mid-September 2018 was based on 111,000 metres of drilling across 756 holes at the project’s Galat Sufar South deposit and Wadi Doum deposit.

Drillers at Orca Gold’s Morondo gold project in Côte d’Ivoire. Credit: Orca Gold.

The company plans to continue drilling at Wadi Doum for the rest of 2018, as well as at the project’s satellite deposits, including the Liseiwi discovery, where in 2015 the company drilled 24 metres grading 3.89 grams gold from surface and 10 metres grading 15.32 grams gold from 38 metres downhole.

“We’ve been granted an extension of the exploration concession that we’ve been operating under,” Clark added. “And so our mining leases will be surrounded by a new exploration concession as well, and the purpose of that is that we’ve only touched the surface of the potential of this ground, and we fully expect this mine will be lasting a lot longer than the designed mine life.”

Meanwhile, Orca is also exploring its Côte d’Ivoire portfolio.

In early October 2018 the company tabled a maiden resource for the Koné gold prospect on its Morondo gold project in Côte d’Ivoire. The project has 34.1 million inferred tonnes grading 1.1 grams gold for 1.2 million oz. gold based on 17,600 metres of reverse-circulation drilling in 115 holes and 528 metres of diamond drilling in two holes. The company intends to complete a preliminary economic assessment for Morondo in early 2019.

Earlier this year, Resolute Mining (ASX: RSG; US-OTC: RMGGY) invested $22 million in Orca Gold by way of acquiring 32 million shares valued at 67¢ per share. Resolute finished the private placements in two tranches, raising its Orca ownership from 9% to 17%.

Shares of Orca are now valued at 46¢ with a 52-week range of 43¢ to 78¢. The company has a $95-million market capitalization.

“With the delivery of this feasibility study we trigger the right to convert our exploration concessions into mining leases,” Clark said.

“A new company will be incorporated in Sudan, and that company will apply for the mining leases, and the shareholders of that company will be ourselves, the government and our business partner who we bought the project from years ago. Sudan is one of the easiest countries we’ve operated in, and we fully expect this to be one of the easiest mines that we will construct in our careers.”

RELATED LINK:

The Norther Miner Podcast – Miner Moment #11: Gold rush in Sudan ft Orca Gold’s Richard P. Clark