Avesoro upbeat on upgraded mineral resource at Youga Gold Mine

West African gold producer Avesoro Resources announced the results of an upgraded mineral resource and mineral reserve estimate on Wednesday, as well as an updated life of mine plan, for its Youga Gold Mine in Burkina Faso.

The AIM-traded firm confirmed a four-year life of mine extension to 2031 based on current proven and probable mineral reserves, with the potential to extend further with additional drilling of existing mineral resources to upgrade the confidence level and prospective satellite targets across its 763 square kilometre exploration portfolio surrounding the Youga, Ouaré and Balogo deposits.

Proven and probable mineral reserves increased by 23% to 14.74Mt, containing 814,900 ounces of gold grading at 1.72 grams per tonne.

Of that, it reported that Youga Mineral Reserves totalled 7.8Mt, containing 372,200 ounces of gold grading at 1.5 grams per tonne, while Ouaré Mineral Reserves totalled 6.7Mt containing 403,000 ounces of gold grading at 1.9 grams per tonne.

Balogo Mineral Reserves totalled 0.2Mt, containing 39,700 ounces of gold grading 5.7 grams per tonne.

Measured and indicated mineral resources were 22.16Mt, containing 1,189,100 ounces of gold grading at 1.67 grams per tonne, while inferred mineral resource totalled 7.6Mt, containing 377,000 ounces of gold grading at 1.5 grams per tonne.

Total forecast recovered gold was 734,066 ounces over the life of mine.

Avesoro reported total upfront capital of $17.7m for the construction of the Ouaré to Youga haul road, tailings storage facility upgrades and the mobilisation of contract operations, plus sustaining capital costs of $17.8m, including tailing storage facility expansion and mine closure.

Average life of mine operating cash costs would be $877 per ounce, and all-in sustaining cash costs were put at $973 per ounce.

Youga’s post tax net present value was said to be $142.6m at a 5% discount rate, with a $1,300 per ounce gold price and life of mine free cash flow generation of $186.8m.

“Following the previous announcement of the updated mineral reserve and mineral resource estimates for the New Liberty gold mine in March, and now the Youga gold mine today, I am pleased to confirm that we have successfully added 950,000 ounces of gold to the company's combined mineral reserve inventory, net of mining depletion, as a result of the company's 2018 exploration campaign across its license portfolio in Liberia and Burkina Faso,” said Avesoro chief executive officer Serhan Umurhan.

“Each of our assets experienced an increase in mineral reserves, net of depletion, and as a result, we have substantially extended the lives of both our mines.

“I now expect the company to sustain group level gold production above 200,000 ounces per annum for each of the next four years as indicated by the updated mine plans.”

Umurhan said that, following the mineral resource and mineral reserve upgrades for both New Liberty and Youga, the combined project level post tax net present value was indicated to be $428.6m after project and equipment finance debt repayments of $100m, and the combined project level post-debt and post-tax life of mine cash flows were indicated as $556.8m, at a $1,300 per ounce gold price.

“We are continuing to assess a number of optimisation options, including ore sorting and heap leach scenarios, to further improve the economics of both projects in addition to the significant potential to add further economic ounces to the projects with additional drilling.”