By Pia Rivera
ALGOLD RESOURCES LTD. (TSXV:ALG) (“Algold” or the “Corporation”) today announced the results of a positive Preliminary Economic Assessment (“PEA”) for the Tijirit Gold Project in Mauritania. The National Instrument 43-101 (“NI 43-101”) compliant PEA work was prepared by Ausenco Engineering Canada (“Ausenco”) in collaboration with DRA/Met-Chem and SGS-Geostat.
Highlights of the Tijirit PEA*
(All monetary amounts are in US dollars unless otherwise indicated.)
- Financial Returns: Pre-tax net present value (“NPV”) of $94.9M at an 8% discount rate with an internal rate of return (“IRR”) of 28.4% and after-tax NPV of $69.0M at an 8% discount rate with an IRR of 23.5%, using a gold price of $1,250 per ounce.
- Revenue: Gross life of mine (“LOM”) revenue of $717.4M.
- CapEx: Pre-production direct capital cost of $96.4M, in addition to indirect costs of $31.2M and a contingency allowance of $17.9M. Total sustaining and expansion CapEx of $47.1M over the mine life including the Phase II expansion in year 4.
- Production:
– Phase I: 1,018 million tonnes per year for a period of four (4) years with an average annual production rate of 104,500 ounces of gold.
– Phase II: 1,642 million tonnes per year for the three (3) following years with an average annual production rate of 53,000 ounces of gold. - Cash Cost: Average cash cost of $475 per ounce during Phase I and $893 per ounce during Phase II
- Mine Life: 7.1 years
- Payback Period: 1.8 years (after-tax)
Summary of PEA Results
| Pre-tax | After-tax | Units | |||
| Free Cash Flow | 170.2 | 134.3 | MUS$ | ||
| NPV 8% | 94.9 | 69.0 | MUS$ | ||
| IRR | 28.4 | 23.5 | % | ||
| Payback Period 1* | 1.6 | 1.8 | years | ||
| 1 Does not include ramp-up period | |||||
*Cautionary Statement NI 43-101: The PEA was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects. Readers are cautioned that the PEA is preliminary in nature. It includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
“The positive PEA marks a significant milestone for Algold Resources,” said Benoit La Salle, Algold’s Chairman and Chief Executive Officer. “In less than two years since embarking on the Tijirit endeavor in March 2016, we are in receipt of positive PEA results that confirm the significant potential of the project. The PEA supports the concept of an open pit mining scenario, which could see the Tijirit Project produce over 550,000 ounces of gold over a seven-year mine life, at a cash cost below US$500/ounce during the first four years. Furthermore, the initial payback period is estimated at 1.6 years and the pre-tax IRR is 28.4%, making it one of the most profitable deposits in West Africa.”
“The Government of Mauritania, partner with Algold in the development of the Tijirit Project, confirms its continued support to Algold and the Project to rapidly develop an active mining project, the second industrial gold mine in Mauritania,” stated the Minister of Petroleum, Energy and Mines, Mr. Mohamed Ould Abdel Vettah. “The Ministry of Petroleum, Energy and Mines is fully focused on supporting foreign investors eager to develop projects creating jobs for the population and value for the country, in the stable framework of the Mauritanian laws and regulations.”
“Several highly qualified global engineering firms including Ausenco, DRA/Met-Chem SGS Geostat, SGS Lakefield, Aecom, WSP, together with the Algold technical group, who collectively have developed numerous successful projects in West Africa and in particular Mauritania, have been instrumental in positioning the Tijirit Project for the next phase,” commented François Auclair, Executive Vice-President, Exploration.
Description of the Tijirit Project and PEA Details
Algold’s Tijirit Gold Project is located in the Tijirit area in northwestern Mauritania. The Tijirit Gold Project PEA consists of the establishment of the mining infrastructure required for the operation of an open-pit mine and the construction and operation of a mill for the treatment of mineralized material to produce gold bullion with a processing capacity of 2,976 tonnes per day (Phase I) and 4,500 tonnes per day (Phase II). The recovery process to be utilized is a conventional gravity concentration circuit and cyanide leaching of the gravity tailings using a Carbon-In-Leach Circuit (“CIL”).
The Tijirit Gold Project includes a 306 km2 (2480C2) Exploitation Permit (“mine lease”) granted on June 11, 2017 by the Mauritanian government. The Exploitation Permit grants Algold the exploration and exploitation rights for gold and related substances for a period of 30 years.
Since the commencement of exploration in April 2016, and within the limits of the mining permit, Algold has been able to define gold resources on the property in three different areas, namely Eleonore, Sophie and Lily, all situated within a five-kilometer radius. The Corporation has also successfully identified promising new areas including Salma, Eleonore East, Nour, and Southeast, potentially hosts to additional resources.
During the first four years of mining operations (Phase I), the mineralized material will essentially be sourced from the high-grade Eleonore zone, with the Sophie and Lily areas to be mined during the last 3.1 years of operation.
The PEA was developed by highly qualified independent consulting groups: Ausenco was responsible for all processing aspects, tailings facility, infrastructures and OpEx associated with them as well as the financial model, DRA/Met-Chem was responsible for all open pit mining aspects with associated CapEx and OpEx as well as the overall project capital cost estimate and SGS-Geostat was responsible for the mineral resources estimate.
| PEA Parameters |
| Gold Price: US$ 1,250/oz |
| Total Tonnes Milled: 9,140 million |
| Diluted Head Grade: Phase I: 3.33 g/t Au – Phase II: 1.07 g/t Au |
| Mine Life: 7.1 years |
| Gold Recovery: Phase I: 96.0% – Phase II: 93.6% |
| Total Gold Ounces Recovered: 580,900 oz |
| Average Annual Gold Production: Phase I: 104,5000 oz – Phase II: 53,000 oz |
| Royalties: 6.5% (5% state royalty and 1.5% third-party royalty) |
Operating Costs
The operating costs were calculated based on the two production rates, one for Phase I and one for Phase II and are exclusive of royalties to third parties and governments. The OpEx also reflects the much lower stripping ratio encountered at Sophie …read more
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