Amara’s Yaoure drilling fills in the gold gaps

“The drilling results from Yaoure increase our conviction in the accuracy of the resource model and the results from the first boreholes drilled into the ‘information gaps’ highlight the potential to expand Yaoure’s 6.3 million ounce resource base further. I am confident that a significant proportion of waste will be converted to mineralised material, reducing the strip ratio (currently 5.2:1 in the 8Mtpa scenario) and further increasing Yaoure’s strong economics. With five DD [Diamond Drill] rigs and one RC [Reverse Circulation] rig on site, and ramping up to eight DD rigs in the near term, I believe Amara is undertaking the largest drilling campaign in Africa. I look forward to maintaining regular news flow from Yaoure over the coming months, culminating in two Mineral Resource updates in H2 2014.”

So says John McGloin, Amara Mining’s Executive Chairman on the latest drilling results on the junior gold miner’s very prospective Yaoure gold project in Cote d’Ivoire.

As McGloin points out in the statement, drilling into the ‘information gaps’ – i.e. areas where lack of previous drilling information meant they had had to have been been classified as waste – confirms deposit continuity and should lead to a further increase in what is already one of the best recent gold resource finds in West Africa. Indeed, as we have pointed out before on Mineweb, the success in proving up scale of resource definition at Yaoure has relegated the company’s previous flagship gold deposit at Baomahun in Sierra Leone to the back burner. Amara doesn’t have the resources or current financial strength to concentrate on both projects simultaneously – even though Baomahun remains a significant deposit in its own right – and is rightly concentrating its efforts where it sees the greater potential. And it should not be forgotten too that with its new mining code, Cote d’Ivoire is nowadays perhaps the most mining supportive nation in the whole of West Africa.

Amara reports that the first 26 DD results have served to confirm the continuity of the deposit and the moderate grade nature of the Yaoure Central zone along strike and at depth, with localised high grade zones, while results from the remaining seven RC holes in the first phase of the in-fill drilling programme continue to confirm the high grade nature and continuity of the CMA zone. More details of the latest drilling are available on the company’s website – Much of the recent drilling has been concentrated on the ground beneath the old Yaoure open pit which had not been able to be drilled until this area had been dewatered, thus allowing access for the drill rigs – hence the aforementioned ‘information gaps’.

Amara has already delivered a Preliminary Economic Assessment (PEA) for Yaoure earlier this year and is working towards delivering a full Pre-feasibility study (PFS) in Q1 2015. It already reckons that the project has the potential to be one of the top 10 gold mines in Africa by production and top 50 in the world and a likely further resource increase should enhance this position.

The PEA looked to average gold production of 325,000 oz/year over a 12 year mine life and all-in sustaining costs as low as US$691 per ounce. On this assumption, the headline 8 million tonne/year ore scenario delivers an IRR of 32% at a gold price of US$1,250 per ounce and an NPV of US$688 million.

The company thus reckons that Yaoure is one of the few development projects in West Africa that remains resilient at low gold prices, with an IRR of 23% at US$1,100 per ounce. The project is flexible and Amara says it delivers similarly strong returns over a range of alternative throughput scenarios. The compelling economics are driven by the excellent existing infrastructure in Côte d’Ivoire, with low cost hydro-electric power from the Kossou dam (5km from site) and a dual carriageway highway to within 40km of site. With 80,000 metres of drilling planned in 2014, there is expected to be strong exploration upside potential on the current NI 43-101 compliant 6.3 million ounce resource base.

Amara’s producing Kalsaka/Sega gold mining operations in Burkina Faso will be completed this year, but there now seems to be an air of optimism overhanging the company which perhaps was not present as recently as a year ago – and that is virtually all down to the positive drilling results and economic scenarios coming out of Yaoure.