Montage Gold gets last permit needed to build US$712M Koné mine

Africa-focused Montage Gold (TSXV: MAU) has secured the final mining permit for its flagship Koné project in Côte d’Ivoire, paving the way to start construction early next year.

The US$712-million project is forecast to churn out a total of 3.6 million oz. gold over a 16-year life, according to an updated feasibility study from January.

Along with the Koné permit, which is valid for 20 years, Montage said it was also awarded an eight-year mining permit for its Gbongogo deposit, with opportunities to extend both through exploration.

The company received environmental approvals for the development in May.

In a note to clients, Cormark Securities mining analyst Nicolas Dion noted the quality of the project and the management behind it.

“We believe Montage’s recently enhanced management team and renewed support of the Lundin Family can unlock the value of Koné, which may serve as the foundational asset in a new West African consolidator,” he wrote. “Once built, Koné would be among the largest and lowest-cost gold mines in West Africa.”

The Lundin Group invested US$17.8 million into Montage in February, giving it a 19.9% stake.

Montage cofounder Richard Clark stepped down as CEO in February, while Martino de Ciccio and Peter Olsen joined the company as CEO and COO, respectively. Clark remains a director. The company also added Lundin Gold (TSX: LUG) president and CEO Ron Hochstein to the board.

90,000 metres

The company said it will continue to advance exploration at the 2,259-sq.-km property with a 30,000-metre drill program expected to be completed later this month. A second, 60,000-metre drill campaign, is to be launched late in the third quarter with the goal of delineating resources at top priority targets.

Koné holds total reserves (proven and probable) of 174.3 million tonnes grading 0.72 gram per tonne gold for just over 4 million oz. of gold.

Montage shares traded 3.7% higher this afternoon in Toronto at $1.70 apiece, giving the company a market cap of $407.5 million. The stock has traded in a 52-week range of 51¢ and $1.77.