Roxgold releases feasibility study for Séguéla project in Côte d’Ivoire

Roxgold (TSX: ROXG; US-OTC: ROGFF) has released the results of a feasibility study  for its Séguéla gold project in Côte d’Ivoire, 240 km northwest of Yamoussoukro.

The company says the study confirms the open-pit project has strong economics and could become one of the highest-grade open pit gold mines in the world.

The feasibility study envisions a series of five open-pit operations with an overall life of mine of just under nine years. Average annual life of mine production is estimated at 120,000 oz. gold, and will average 133,000 oz. a year during the first six years, with annual peak production of 151,000 oz. in year four.

The all-in sustaining costs (AISC) for the life of mine are pegged at US$832 per oz., and during the first six years are anticipated to come in at US$797 per ounce.  The study says this will generate average annual earnings before interest, taxes, depreciation and amortization (EBITDA) of US$107 million over the mine’s life, with an average annual EBITDA of US$130 million over the first six years.

Pre-production capital costs for Séguéla are estimated at US$142 million, the majority of which (US$81.3 million) is earmarked for a central processing plant to be built near the main Antenna deposit in a traditional hub and spoke operation.

The Séguéla project is centred on Antenna, surrounded by four additional satellite deposits, Koula, Ancien, Agouti and Boulder. The satellite deposits are all located within one to five kilometres of Antenna.

John Dorward, the company’s president and CEO, says Seguela’s  “robust economics” include an after-tax net present value (NPV), attributable to Roxgold’s 90% interest, of US$380 million, with an after-tax internal rate of return (IRR) of 49%, using a base case gold price of US$1,600 per oz. for both metrics.

“I think the other factor that I really like about this is the capital efficiency,” Dorward said in an interview. “You see a lot of studies for mines published where there’s a big chunk of the NPV, but there’s an equal, or even sometimes chunkier, pre-production capital sitting alongside that. And that’s where you need to find more gold [or] extend the mine life to really generate a return. But, when you have a project like this, that balances the NPV over what you have to outlay, it looks much better.”

Séguéla has initial proven and probable reserves of 12.1 million tonnes grading 2.8 grams gold per tonne, for a total of 1.1 million oz. gold.  The Antenna deposit is by far the richest of the project, with proven and probable reserves of 7.2 million tonnes grading 2.1 grams gold per tonne for 482,000 oz. gold.

The project’s measured and indicated resources stand at 14 million tonnes grading 3 grams gold per tonne for 1.3 million oz. gold, with another 1.5 million inferred tonnes grading 2.2 grams gold per tonne for 104,000 ounces.

When asked how Roxgold managed to advance the project so quickly, moving from acquisition to a feasibility study in just two years, Dorward acknowledged the expertise of the core Roxgold team, but pointed out the team has been augmented by the many skilled contractors and employees in the region, as well as good access to infrastructure in Côte d’Ivoire and a strong working relationship with the local authorities.

“To be honest, and people are a little skeptical when I say this, but we run up against very little interference or issues that aren’t within the normal technical realms with a mining project working here,” said Dorward, speaking about working in West Africa. “The government, the stakeholders, they very much appreciate the contribution fiscally from mining. I think they appreciate the skills transfer and the ripple effect it has through the economy. So they’re very keen to see additional foreign direct investment. In a prudent, responsible and sustainable manner.”

Dorward noted that all the required construction permits have been approved, front-end engineering and design work is well advanced and procurement activities of long lead items are currently underway. Early-stage work has already commenced at the property, with the building of a site access road and construction of the camp.

“The next steps underway are to complete our mining convention, which is essentially our fiscal stability agreement with Côte d’Ivoire,” said Dorward. The company plans to continue exploration, focussing on chasing the down plunge extensions at Koula and Ancien.

“If we can show that’s there’s continuity in the grade and widths, that’ll be enough to vault this into a very big project with a considerable increase on the current life of mine plans,” he said. “So, I think we’re looking good for a first pour towards the latter part of next year. We’re still confident that that’s within our grasp.”

Roxgold acquired Séguéla from Newcrest Mining (TSX: NCM; ASX: NCM) in April 2019 for US$20 million in cash.

Roxgold has two other major gold assets in the region, the underground Yaramoko mine and the developing Boussoura project, both located in nearby Burkina Faso.

At presstime, Roxgold was trading at $1.92 within a 52-week range of $1.08 and $2.08. The company has 375 million common shares outstanding for a market cap of $718 million.