Loncor Gold Inc. (TSX:LN, OTCQX:LONCF) said the Preliminary Economic Assessment (PEA) of the main Adumbi gold deposit within its 84.68%-owned, 122-square-kilometer Imbo project in the Democratic Republic of the Congo (DRC) has shown favorable results.
The Adumbi PEA was prepared for Loncor by mining and engineering consultants led by New SENET. The PEA pointed to an average annual production of 303,000 ounces of gold over a 10.3-year life of the mine within the proposed pit shell.
"The results from the Adumbi PEA demonstrates a robust project with an average of +300,000 ounces of gold per annum over 10 years with low total cash costs and all-in sustaining (AISC) costs of US$852 and US$950 per ounce respectively over the life of the mine (LOM) for the HEP Hybrid power case,” said Loncor’s President, Peter Cowley, in a statement.
READ: Loncor Gold reports multiple wide high-grade gold intersections at its Democratic Republic of Congo-based drill program
The company said significant upside potential remains at Adumbi to boost mineral resources, gold production, reduce operating costs, and improve the economics of the project.
“At Adumbi, the mineralized BIF host sequence increases in thickness below the open pit shell and wide-spaced drilling has already intersected grades and thicknesses amenable to underground mining,” said Cowley. “Further drilling is required to initially outline a significant underground mineral resource which can then be combined with the open pit mineral resource so that studies can be undertaken for a combined open pit and underground mining scenario at Adumbi.”
Cowley emphasized that besides increasing the resource base, a combined open pit/underground project could increase grade and result in deeper mineral resources being mined underground which could increase annual gold production and reduce operating costs.
“Additional deposits and prospects occur close by to Adumbi and have the potential to add mineral resources and feed for the Adumbi mine operation. Along trend from Adumbi, the Manzako and Kitenge deposits have Inferred Mineral Resources of 313,000 ounces (1.68 million tonnes grading 5.80 grams per ton (g/t) of gold) and remain open along strike and at depth,” said Cowley.
The company said that further along the strike within the Imbo permit area, “four priority prospects” have been identified with similar host lithologies to Adumbi and will require drilling. Additional feed for the Adumbi processing plant could also come from Loncor’s high-graded Makapela deposit.
As part of efforts to improve Adumbi’s economics, Loncor is in talks with power suppliers with experience in the Congo to project finance and build a hydroelectric facility at Adumbi and then have an offtake agreement with Loncor to supply power for the operation. Any hydroelectric power scheme could also have the potential to obtain carbon credits, said the company.
Loncor said a financial analysis was done on two power options at Adumbi which included a hydroelectric power (HEP) hybrid case and a diesel-only case.
The analysis estimated a pre-tax Net Present Value (5% discount) of US$895 million and a post-tax Net Present Value of US$624 million for the HEP Hybrid case at a US$1,600 gold price. By using a US$1,760 gold price, it also arrived at a post-tax Net Present Value (5% discount) of US$879 million for the HEP Hybrid case. The study also calculated the average total cash costs of US$852 per ounce over the life of mine and all-in sustaining costs of US$950 per ounce for the HEP Hybrid case.
The company cautioned that the Adumbi PEA is preliminary in nature.
Drilling started on the Adumbi deposit in 2010 and to date, 74 core holes have been drilled.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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