Endeavour in a whirlwind of activity at its West African mines

VANCOUVER — It’s been a transformational year for Endeavour Mining (TSX: EDV), ever since La Mancha Holding Sarl — a private investment firm co-controlled by Egyptian billionaire Naguib Sawiris — exchanged US$63 million for a 30% stake in the West Africa-focused gold producer.

The transaction, which closed in November last year, included La Mancha’s 55% interest in the Ity gold mine in Burkina Faso, along with 3,500 sq. km of West African exploration properties, and up to $75 million in-principal commitments.

One month after the investment, Endeavour paid off the rest of its shareholder loans totalling $181 million for developing its Agbaou gold mine in Côte d’Ivoire.

By February, the company sold its Youga gold mine in Burkina Faso, which had two years of mine life left, to privately held MNG Gold for US$25.3 million.

Then in April, Endeavour picked up the Karma gold project, also in Burkina Faso, through the $191-million acquisition of True Gold Mining, spurring another $82.6 million out of La Mancha to keep its 30% interest.

The same month, the company broke ground at its upcoming US$328-million Houndé gold mine in Burkina Faso, which could become its flagship low-cost mine when it goes into production at the end of next year.

Martino de Ciccio, vice-president of strategy and business development, tells The Northern Miner from the company’s new headquarters in London, England, that following a $144-million bought-deal financing in July, the company is ready to make its next strategic investment.

“The cash that La Mancha brought enabled us to deleverage the balance sheet, which was a big problem for Endeavour in the past, but most importantly it allowed us to unlock the financing for Houndé,” he says. “The next key focus for us, aside from being good operators, is to relaunch exploration. In the past, Endeavour wasn’t able to do much exploration, just the bare minimum to replace reserves. Today, with a strengthened balance sheet, we’re able to start exploring again.”

Latest news from the company signalled a discovery called “Bakatouo” at its Ity gold mine in Côte d’Ivoire. The deposit is located along the northeastern extension of the open-pit mining complex, and extends over 800 metres along strike and 250 metres wide.

Geology map of Bakatouo gold discovery at Endeavour’s Ity mine with latest exploration drill results. Credit: Endeavour Mining.

Results from a 165-hole drilling program, totalling 20,000 metres, include intercepts of 9.7 metres at 27.7 grams gold per tonne and 12.3 metres of 12.21 grams gold.

The drill campaign aimed to find more sources for the mine’s proposed carbon-in-leach (CIL) project, which could extend the mine life by at least another 10 years. Endeavour plans to release a feasibility study for the CIL project at the end of October.

Modelled on a pit shell that assumes US$1,500 per oz. gold, Ity contains 27.3 million measured tonnes of 1.36 grams gold for 1.2 million oz., 31.8 million indicated tonnes of 1.69 grams gold for 1.7 million oz. gold and 9.7 million tonnes of 1.47 grams gold for 458,300 oz. gold, assuming a 0.5 gram gold cut-off.

In 2015, the mine produced 80,807 oz. gold from 1.1 million tonnes at grades of 2.56 grams gold.

“For us, finding a discovery over an 800-metre strike length is significant when comparing it to the other deposits on-site,” de Ciccio says. “It has higher-grade material, so on one hand it could help prolong the heap-leach operation at Ity, and on the other hand, increase the economics of the CIL project.”

The company is planning to complete 8,000 metres of drilling at Bakatouo in November, and deliver a maiden resource for the deposit by year-end.

Geological cross section view displaying latest drill results of Endeavour’s Bakatouo gold discovery. Credit: Endeavour Mining.

Mineralization at Ity is somewhat unusual compared to the shear zone-hosted deposits found elsewhere in the Proterozoic-aged Birimian greenstone belts of West Africa.

It’s the only recognized gold skarn in the region, where mineralization developed between highly reactive carbonate rocks and intrusives. Over millions of years, rain and groundwater leached the sulphides and dissolved the underlying carbonate material, generating karsts.

The deposit’s geometry changed as the weathered rock collapsed into the open voids, concentrating initial gold mineralization into a much smaller rock volume.

A geological cross section of the Mont Ity skarn gold deposit shows how weathering has changed the deposit’s geometry. Credit: Endeavour Mining.

Patrick Bouisset, newly appointed executive vice-president of exploration and growth for Endeavour, tells The Northern Miner that Bakatouo could be the first of many more discoveries to come.

The company recently secured an 80 km long corridor of prospective stratigraphy on trend with its Ity mine, increasing its land holdings from 178 to 664 square kilometres.

“We consider the new land package as a pure greenfield play that has a high potential to host additional orebodies,” Bouisset said. “We know that it contains the same intrusions and favourable units that host mineralization at Ity, yet historically, there’s been little exploration completed in the area.”

Endeavour plans to release a long-term exploration strategy at the end of November, with the aim to extend all mine lives under the company’s portfolio to at least 10 years.

Endeavour’s district tenement package secures over 80 km strike length of prospective Birimian geology. Credit: Endeavour Mining.

Endeavour expects to produce between 575,000 and 610,000 oz. gold this year, at all-in-sustaining-costs (AISC) between US$870 and US$920 per oz. gold, from its five gold mines in West Africa: Agbaou and Ity in Côte d’Ivoire, Tabakoto in Mali, Nzema in Ghana and Karma in Burkina Faso.

According to the company, the addition of Houndé could lift Endeavour’s production to beyond 900,000 oz. gold per year, and decrease its AISC to US$800 oz. gold by 2018.

The company has traded within a 52-week range of 60¢ to $26.38 per share, and closed at $25.18 per share at press time. The company has 92.7 million shares outstanding for a $2.4-billion market capitalization.

In November last year, the company consolidated its shares on the basis of 10 to 1.