REG - Cora Gold Limited - Sanankoro Gold Project Optimised Project Economics

Cora GoldAnnouncement

21/11/2022 07:16

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RNS Number : 9736G  Cora Gold Limited  21 November 2022

 

 

Cora Gold Limited / EPIC: CORA.L / Market: AIM / Sector: Mining

 

21 November 2022

 

Cora Gold Limited ('Cora' or 'the Company')

Sanankoro Gold Project: Optimised Project Economics

& Investor Presentation

 

Cora Gold Limited, the West African focused gold company, is pleased to
announce Optimised Project Economics following the announcement of Maiden
Reserves and completion of a Definitive Feasibility Study ('DFS') for its
flagship Sanankoro Gold Project ('Sanankoro' or the 'Project') in southern
Mali (see announcement dated 21 November 2022).

 

Highlights

 

●    Optimised Project Economics (post tax, based on a gold price of
US$1,750/oz) and Maiden Probable Reserve of 422koz @ 1.3 g/t Au:

○    52.3% internal rate of return ('IRR')

○    1.2 year payback period

○    US$71.8m first full year free cash flow ('FCF')

○    US$234m FCF over life of mine ('LOM')

○    US$997/oz all-in sustaining costs ('AISC')

○    6.8 years Reserve mine life

○    56,000oz pa average production

○    US$90m pre-production capital (including mining pre-production &
contingencies)

 

●    The optimisations to the DFS were focused on capital expenditure
savings which have delivered improved Project economics

 

●    Solar hybrid power option incorporated into the plant design,
delivering savings in both operating costs and carbon emissions.

 

●    121koz of pit optimised Inferred Resources, using the same
parameters as Reserves, offer potential for an additional 2.5 years of mine
life and US$76m additional FCF (based on a gold price of US$1,750/oz). Further
infill drilling should, in time, enable the conversion of these Resources to
Reserves.

 

●    Significant potential upside from Exploration Target estimated to
contain between 26.0 Mt and 35.2 Mt with a grade range of 0.58 - 1.21 g/t Au
for a potential 1,370koz Au.

 

●    Lionhead Capital Advisors Proprietary Limited ('Lionhead') has
confirmed continued support for the Project and is in discussions around a
term sheet for up to US$30m.

 

 

Bert Monro, Chief Executive Officer of Cora, commented, " The Optimised
Project Economics, worked on concurrently with the completion of the DFS, have
delivered a project with 52% IRR, 1.2 year payback and with US$234m of free
cash flows being generated over the Reserve mine life.

 

"Sanankoro benefits from a low strip ratio mine plan focused on oxide ore
which helps deliver a low technical risk project.   The Company also has
considerable further upside potential with pit optimised Resources, using the
same parameters as the Reserves, adding 2.5 years to the existing 6.8 year
Reserve mine life and US$76m free cash flows.  In addition, as recently
announced, Sanankoro has an Exploration Target that shows the potential for up
to an additional 1,370koz Au within 8km of existing pits, offering significant
future growth.

 

"Investment firm Lionhead has confirmed to the Company its continued support
to fund the future development of Sanankoro. The Company and Lionhead are in
constructive discussions in respect of the arrangement for a funding package
of up to US$30 million.  Furthermore, we have started discussions with a
number of potential lenders to support the Lionhead term sheet to fully fund
the Project. The Company anticipates providing further updates on these
fundings in due course."

 

 

Optimised Study - Summary of Results

 

The key results and financial outcomes following the optimisations are set out
in the table below:

 

                                                                         Values

                                                                         based on a gold price of …
 Parameters                                                              US$1,750/oz      US$1,650/oz
 Construction period (1) (months)                                        21
 Life of Mine ('LOM') (years)                                            6.8
 LOM waste mined (kt)                                                    46,564
 LOM ore mined (kt)                                                      10,094
 Strip ratio (waste : ore)                                               4.61 : 1
 LOM grade processed (g/t Au)                                            1.30
 Average gold recovery                                                   90.1%
 LOM production (koz)                                                    380
 Average production (koz pa)                                             56
 Average Free Cash Flow post tax (US$m pa)                               34.3             30.3
 LOM Free Cash Flow post tax (US$m)                                      234              207
 Mining costs (US$/t ore)                                                15.80
 Processing & maintenance costs (US$/t ore)                              10.00
 General & administration plus other costs to mine gate (US$/t ore)      3.10
 Payback period post tax from start of operations (years)                1.2              1.3
 Pre-production capital (US$m)                                           90

 (including US$9m mining pre-production & US$6m contingency)
 Sustaining capital (2) (US$m)                                           58
 Average cash cost (US$/oz Au)                                           771
 Average AISC (US$/oz Au)                                                997              992
 IRR pre-tax                                                             62.0%            52.6%
 IRR post tax                                                            52.3%            43.6%
 NPV(8) pre-tax (US$m)                                                   135.8            109.1
 NPV(8) post tax (US$m)                                                  95.1             74.8

1 includes pre-construction engineering work and commissioning the plant

2 includes closure costs

 

Optimised Study - Capital and Operating Costs

 

Pre-production capital cost of US$90m, including US$9m mining pre-production
and US$6m contingency.

 

The pre-production capital cost estimate is based on a contractor mining
scenario and therefore excludes capital costs associated with a mining fleet.

 

 Capital items                               US$'000
 Civil works                                 5,122
 Earth works                                 3,513
 Machinery & equipment                       31,704
 Infrastructure                              1,194
 Transport                                   5,432
 First fills                                 868
 Mine camp                                   2,206
 ESIA channels                               2,859
 Project management                          4,500
 Insurance & guarantees                      650
 Generator / thermal plant                   250
 Tailings storage facility ('TSF'; phase 1)  11,895
 Resettlement action plan                    1,000
 Owners costs                                3,814
 Mining pre-production                       8,941
 Contingency                                 5,838
 Total pre-production capital                89,787
 Sustaining & closure capital                57,868
 Total LOM capital                           147,655

 

An estimated LOM average AISC of US$997/oz based on a gold price of
US$1,750/oz.

 

A solar hybrid power option has been incorporated into the plant design,
delivering savings in both operating costs and carbon emissions.

 

                                          Values

                                          based on a gold price of …
 Operating / unit costs (US$/oz of gold)  US$1,750/oz      US$1,650/oz
 Mining                                   418.8
 Processing                               241.5
 Maintenance                              22.8
 General & administration                 83.8
 Total cost to mine gate                  766.9
 Transport, insurance & refining          3.7
 Total cash cost ('C1')                   770.6
 Royalties & statutory                    73.8             69.6
 All-in sustaining cost ('AISC')          996.5            992.3

 

 

Site layout

 

Optimised Study - Overview

 

Cora's Management undertook a review of various DFS work streams as they were
nearing completion and in conjunction with peer reviews by independent
consultants identified a number of optimisations to enhance the Project's
economics. The optimisations were focused on capital expenditure savings with
independent engineering firms providing lower pricing for both the TSF and
project management (engineering, procurement and construction management
('EPCM')) contracts. Additionally, the Company has incorporated the benefit of
pricing a second-hand smaller mill offering both capital and operating cost
savings. The review of the TSF design and capex was carried out by Mario
Boissé of independent consultancy MRP801. Mr Boissé has relevant recent
experience in West Africa. The re-quote of the EPCM was provided by a
well-established West African Company which also has significant relevant
experience of constructing gold mines in West Africa.

 

The process flow sheet is undergoing further optimisation with the aim of
improving the economics further.  The optimisations being considered are
around taking greater advantage of the oxide nature of the ore at the front
end of the process flow sheet that could lead to opex savings.  The Company
will look to conclude this process before commencing the front-end engineering
design ('FEED') prior to construction.

 

Future Potential

 

In addition to the Optimised Study, modelling has been carried out to add pit
optimised inferred resources (using the same parameters as the Reserves and
based on a gold price of US$1,650/oz) to the Maiden Reserves mine schedule.
This illustrates the potential of converting inferred resources to reserves
through additional drilling. The results of this modelling are set out below:

 

                                            Values

                                            based on a gold price of …
 Parameters                                 US$1,750/oz      US$1,650/oz
 Life of Mine ('LOM') (years)               9.3
 LOM waste mined (kt)                       51,989
 LOM ore mined (kt)                         13,751
 Strip ratio (waste : ore)                  3.78 : 1
 LOM grade processed (g/t Au)               1.25
 Average gold recovery                      90.8%
 LOM production (koz)                       501
 Average production (koz pa)                54
 Average Free Cash Flow post tax (US$m pa)  33.2             29.5
 LOM Free Cash Flow post tax (US$m)         310              276
 Average cash cost (US$/oz Au)              755
 Average AISC (US$/oz Au)                   973              969
 IRR pre-tax                                63.7%            55.0%
 IRR post tax                               54.7%            46.9%
 NPV(8) pre-tax (US$m)                      190.6            157.8
 NPV(8) post tax (US$m)                     136.6            112.2

 

Furthermore, on 7 November 2022 the Company announced the results of an
Exploration Target estimate ('Exploration Target') for the Company's wider
Project. A total of 12 areas comprise the Exploration Target, with three areas
responsible for over 50% of the Exploration Target, these being Target 3,
Target 5 & 6 and Selin-Bokoro West Extension. The Exploration Target is
estimated to contain between 26.0 Mt and 35.2 Mt with a grade range of 0.58 -
1.21 g/t Au for a potential content of 490koz - 1,370koz. This in addition to
the Indicated and Inferred Mineral Resource of 24.9 Mt at 1.15 g/t Au for
920koz announced on 19 July 2022.

 

Investor Presentation

 

The Company has published an updated corporate presentation which can be found
on Cora's website at: https://www.coragold.com/category/company-presentations/
(https://www.coragold.com/category/company-presentations/) .

 

In addition, Cora Gold is pleased to announce that Bert Monro, Chief Executive
Officer of Cora, will provide a live presentation relating to the Optimised
Project Economics for Sanankoro via the Investor Meet Company platform on 28
November 2022 at 10:30am GMT.

The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9am the day before the meeting or at any time during the live presentation.

 

Investors can sign up to Investor Meet Company for free and add to meet Cora
via:

 

https://www.investormeetcompany.com/cora-gold-limited/register-investor
(https://www.investormeetcompany.com/cora-gold-limited/register-investor)

 

Investors who already follow Cora on the Investor Meet Company platform will
automatically be invited.

 

Market Abuse Regulation ('MAR') Disclosure

 

Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of the Market Abuse
Regulation (EU) No 596/2014 ('MAR'), which is part of UK law by virtue of the
European Union (Withdrawal) Act 2018, until the release of this announcement.

 

* * ENDS * *

 

For further information, please visit http://www.coragold.com
(http://www.coragold.com/) or contact:

 

 Bert Monro           Cora Gold Limited            info@coragold.com (mailto:info@coragold.com)

 Craig Banfield
 Christopher Raggett  finnCap Ltd                  +44 (0)20 7220 0500

 Charlie Beeson       (Nomad & Joint Broker)
 Andy Thacker         Turner Pope Investments      +44 (0)20 3657 0050

 James Pope           (Joint Broker)
 Susie Geliher        St Brides Partners           pr@coragold.com (mailto:pr@coragold.com)

 Charlotte Page       (Financial PR)

 Isabelle Morris

 

Notes

 

Cora is a West African gold developer with three principal de-risked project
areas within two known gold belts in Mali and Senegal covering c.1,000 sq km.
Led by a team with a proven track record in making multi-million ounce gold
discoveries that have been developed into operating mines, its primary focus
is on developing the Sanankoro Gold Project in the Yanfolila Gold Belt,
southern Mali.

 

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