Tietto Minerals (ASX:TIE) is targeting 200,000 ounces of gold in the first year of production at its flagship Abujar Gold Project in Cote d’Ivoire, following a successful pre-feasibility study (PFS).
The company, which listed on the ASX in January 2018 to develop the Abujar project, is predicting to produce more than 168,000 ounces of gold for the first six years of its production.
Abujar project now has maiden open pit probable reserves of 15.7 million tonnes run-of-mine (ROM) gold ore at 1.7 g/t for 860,000 total ounces, representing a 65% conversion of the indicated resource estimate.
West Africa’s next gold mine
Tietto managing director Dr Caigen Wang said investors could look forward to a healthy stream of news flow regarding the 3.02-million-ounce gold project and pointed to upgrades on the base case.
“Delivery of this maiden JORC 2012 open pit ore reserve and supporting PFS is a milestone for Tietto and our shareholders, as it moves us closer towards realising our goal of developing West Africa’s next gold mine,” he said.
“The PFS metrics are compelling and clearly suggest that the development of Abujar will transform Tietto into a substantial West African gold producer.
“Abujar is shaping up as a robust, long‐life project based on the open‐pit mine development, and we believe there is considerable upside to the base case PFS, with a scoping study of the APG open pit and AG underground deposits demonstrating considerable value remains to be unlocked for our shareholders.”
PFS highlights
Beyond the actual gold production forecasts, the fundamental signs for a long-life producing gold mine are sound.
The company holds life-of-mine ore reserves of 22.9 million tonnes ROM at 1.5 g/t for 1.1 million ounces at average all‐in sustaining costs (AISC) of $839/ounce.
Tietto expects to pay back the costs of development, estimated at $230 million, in less than three years.
The PFS delivered strong economics of pre‐tax net present value (NPV) of $363 million, internal rate of return 53%, and post‐tax NPV of $266 million, IRR 42%, based on an average gold price of US$1,506/ounce.
That should lead to free cashflow of more than $509 million (pre‐tax) over the first 10 years, with substantial upside to the project to be considered in the definitive feasibility study (DFS), which is expected to be completed next quarter.
Tietto said the PFS economics supported the substantial debt funding element to the funding mix for Abujar and discussions continue with potential project financiers.
The company has already secured all the requisite mining and environmental approvals needed for the project with negotiations with the Ivoirian Government on Abujar Mining Convention underway and expected to be ratified this quarter.
Looking ahead
Tietto is confident of expanding the outlook of the project in the DFS, with the potential to increase NPV to a post-tax total of $311 million at 43% IRR, using an average gold price of US$1,491/ounce, as well as boosting the mine life and the total gold production to 1.44 million ounces.
Dr Wang said the DFS would optimise throughput and reduce waste stripping costs and updated resource model by late May 2021.
“We will build on the value drivers that have been identified,” he said. “For example, the DFS will consider the additional throughput potential and the lower operating costs of processing oxide and transition material in mine plan, and we will investigate the optimum processing rate to ascertain the correct mill size during the DFS.
“This has the potential to increase the value from mining operations earlier in the life of mine.
“Work will also commence on determining the feasibility of establishing a heap leach operation that will seek to add further value to the project from the resource base at APG.
“We are confident the Abujar Gold Project will continue to enjoy growth in both resources and reserves over the year through our continued aggressive drilling program.
“We have commenced early‐stage debt financing negotiations for the project and we are focused on advancing the Abujar Gold Project towards becoming West Africa’s next gold mine.”
- Daniel Paproth