VANCOUVER, Jan. 22, 2013 /CNW/ - Endeavour Mining Corporation ("Endeavour") (TSX: EDV) (ASX: EVR) (OTCQX: EDVMF) announces the results of a positive NI 43-101 Preliminary Economic Assessment (PEA) of its Houndé Gold Project in Burkina Faso together with an updated mineral resource estimate for the project and positive in-fill drill results completed subsequent to the resource estimate. Endeavour is rapidly advancing Houndé, which has entered the Feasibility Study stage.
(All amounts in US dollars unless otherwise indicated)
Houndé PEA Highlights, on a 100% basis, include:
- Estimated potential average annual production of 161,000 gold ozs per year over a 10 year mine life, with total life of mine production of 1.61 million ozs
- An average 91% process recovery at a milling rate of 8,000 tonnes per day supplying a conventional gravity/CIL circuit
- Owner operated open pit mining and a potentially economic portion of the resource of 28 million tonnes grading 2.0 g/t Au (at 0.91 g/t Au cut-off)
- Initial start-up capital is estimated at $303 million with sustaining capital estimated at $57 million (excluding VAT and import duties)
- Total initial funding requirement is estimated at $345 million including start-up capital, VAT, import duties and certain first year equipment purchases
- Forecast life of mine direct cash cost of $563 per ounce (excluding royalties)
- The project yields, on an after-tax basis:
| At $1,300/oz Gold
Price (Base Case)
| At $1,650/oz Gold
|NPV 0%||$505 million||$920 million|
|NPV 5%||$288 million||$584 million|
Neil Woodyer, CEO, stated
"The Houndé Gold Project is an outstanding addition to our potential production growth profile with a well-defined, good grade mineralized deposit that has excellent infrastructure and robust preliminary economics. The Houndé deposit has grown quickly in size with every drill program, including an 63% increase in Indicated resources in the update announced today, and has now reached a scale where the development of a mine at Houndé could potentially increase Endeavour's production rate to over 550,000 gold ozs per year during 2016. Work has already begun on a Feasibility Study for Houndé, with all contractors engaged and shipment of metallurgical samples for testing. The in-fill drill program, underway since October 2012, is almost 70% complete and is targeting conversion of Inferred resources to Measured and Indicated to further support the Feasibility Study due to be completed in Q4 2013."
Management Conference Calls
Endeavour's Management will host two conference calls to discuss the results of the Houndé PEA, 2012 Production Results, and 2013 Guidance at times convenient for the North American and Australian time zones on January 23, 2013 and January 24, 2013. Both conference calls will include Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, Christian Milau, Chief Financial Officer, and Don Dudek, Senior Vice President - Technical Services. Details for the conference calls can be found at the end of this news release.
Houndé PEA Summary
Endeavour currently has a 100% interest in the Houndé Gold Project, situated in the south-western region of Burkina Faso just south of Semafo's Mana mine (see Figure 1). Ownership is currently 100%, however, upon achieving production it would become 90% by Endeavour and 10% by the government of Burkina Faso.
The Houndé Project PEA focuses on the Vindaloo group of deposits that are located approximately 250 km southwest of Ouagadougou, the capital city of Burkina Faso. The deposits are approximately 2.7 km from a paved highway and as close as 200 metres from a 220 kV power line that extends from Cote d'Ivoire through to Ouagadougou. The nearby town of Houndé has a population of approximately 22,000. A rail line that extends to the port of Abidjan, Cote d'Ivoire lies approximately 25 km east of the deposit area.
The PEA considered the owner operated development of two open pit mines over the Vindaloo and Madras NW zones. The Vindaloo pit would mine a series of closely spaced gold zones along an approximate 4.8 km strike length. The Madras NW pit would be approximately 900 metres long and would only mine saprolite and transition mineralization.
The PEA is preliminary in nature as it includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves at this time, and as such there is no certainty that the preliminary assessment and economics set forth in the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The PEA should not be considered a substitute for a preliminary feasibility study. The authors of this Technical Report believe the Project has the potential to be economic and that therefore further studies are warranted. Pit shells were optimized using a $1,300/oz gold price.
Parameters for the PEA were developed in conjunction with SRK Consulting (Canada) Inc. and are presented in the tables below.
Figure 1 - Endeavour Mines and Houndé Project Location Map
Table 1: PEA Parameters
|Revenue, Smelting & Refining|
|Royalties @ 5% of NSR||US$/oz||$64.80|
|Royalties @ 2% of NSR||US$/oz||$25.92|
|Net Gold Price||US$/oz||$1,205.28|
|OP Waste Mining Cost||US$/t waste||$1.40||$1.76|
|OP Mineralized Mining Cost||US$/t ore||$1.37||$1.73|
|Strip Ratio (estimated)||t:t||8.0|
|OP Mining Cost||US$/t milled||$12.60||$15.84|
|Processing Cost||US$/t milled||$11.00||$13.00||$15.00|
|Total OPEX Estimate (excl Waste Mining)||US$/t milled||$14.97||$16.97||$18.97|
|Process and Mining Losses|
|Slope Angles (overall)|
|Saprolite||degrees||28 to 35|
|Transition||degrees||38 to 40|
|Fresh||degrees||43 to 50|
All mineralized material classified as Indicated (74%) and Inferred (26%) Mineral Resources was considered in the optimization and mine plan.
Table 2: PEA Mineralized Material Parameters
| Contained Gold
|Indicated Mineralized Saprolite Mined||
|Indicated Mineralized Transition Mined||
|Indicated Mineralized Fresh Mined||
|Total Indicated Mineralized Material||
|Inferred Mineralizaed Saprolite Mined||
|Inferred Mineralized Transition Mined||
|Inferred Mineralized Fresh Mined||5.2||2.30||385|
|Total Inferred Mineralized Material||
|Waste Saprolite Mined||
|Waste Transition Mined||
|Waste Fresh Mined||
|Total Waste Mined||
|Mining Rate (total Material)||tpd||63,000||
The PEA parameters led to the development of the mining scenario presented below which envisions a four phase pit, with mining progressing from south to north (see Figure 2). The PEA life of mine gold production schedule, based upon an average through put of 2.9 Mt, detailed on an annual basis, is shown in Table 3.
Table 3 - Houndé Life-of-Mine Gold Production Profile
| Tonnes Treated
| ROM Gold
| Gold Production
Notes: Stockpiling strategies for various mineralization types will cause slight annual variations compared to this high-level summary. A further payables factor of 99.5% has been applied to gold production for preliminary economic modelling.
Figure 2: Whittle Pit with Phase 1 in blue at the south end of the Vindaloo deposits
Houndé Capital Cost Estimate
The total estimated cost to bring the Houndé Gold Project into production is $303 million, inclusive of contingency and working capital but excluding VAT and import duties, as summarized in Table 4. The total initial funding requirement, including VAT, import duties, and certain first year equipment purchases amounts to $345 million.
Table 4: Houndé Capital Cost Estimate
|Houndé Capital Cost||US$ Million|
|Capitalized Pre-production Development||28.2|
|Tailings and Water||7.2|
|Roads and Infrastructure||44.7|
|EPCM, Permitting and Owner's Costs||35.8|
|Total Pre-production Capital Costs||303.0|
|VAT (refundable) and Import Duties||30.3|
|Equipment Purchases (from Year 1)||12.0|
|Total Initial Funding Requirement||345.3|
Houndé PEA Financial Summary
Based on the scenario detailed in Tables 1 through 4, the Houndé Project generates the following financial results:
At $1,300/oz gold price (Base Case)
- NPV at 0% discount rate totals $687 million
- NPV at 5% discount rate totals $422 million
- IRR = 29%
- NPV at 0% discount rate totals $505 million
- NPV at 5% discount rate totals $288 million
- IRR = 21%
- Payback 38 months from commencement of production
- Cash cost per ounce produced - $563/oz (excluding royalties)
- Cash cost per ounce produced - $641/oz (including royalties)
At $1,650/oz gold price (Sensitivity)
- NPV at 0% discount rate totals $1,190 million
- NPV at 5% discount rate totals $782 million
- IRR = 45%
- NPV at 0% discount totals $920 million
- NPV at 5% discount totals $584 million
- IRR = 34%
- Payback 20 months from the commencement of production
- Cash cost per ounce produced - $563/oz (excluding royalties)
- Cash cost per ounce produced - $678/oz (including royalties)
2012 Houndé Resource Estimate
The PEA, prepared by SRK Consulting (Canada) Inc. is based on a mineral resource estimate prepared by Eugene Puritch, P.Eng, Fred Brown, P.Geo. and Antoine Yassa, P.Geo. of P&E Mining Consultants Inc.
The current resource estimate for the Vindaloo zone at the Houndé Project represents an 63% increase in Indicated mineral resources to 23,708,000 tonnes at 1.91 g/t Au for a total of 1,456,000 ounces of gold. In addition, there is also a modest 6% increase in Inferred mineral resource to 12,210,000 tonnes at 1.91 g/t Au for a total of 752,000 ounces of gold.
All current mineral resources on the Houndé property lie within the Kari Nord concession ('Initial Licenses Areas') and are subject to a Transfer and Claw-Back Option Agreement with African Barrick Gold plc ("African Barrick"). If the resources on the Initial Licenses Areas, as determined by a feasibility study, are less than 3 million ounces then African Barrick does not have any claw-back right but retains a 2% NSR.
The mineral resource estimate for the Vindaloo deposits is reported at a cut-off grade of 0.35 g/t Au, is contained within a conceptual open pit shell and has an effective date of October 31, 2012.
Table 5: Houndé Mineral Resource Estimate (effective October 31, 2012)
|Tonnes||Grade (g/t)||Gold Ounces|
|(1)||Resource estimates based on a gold price of US$1,600 per ounce, a 95% process recovery for saprolite and transition and 92% for fresh, mining costs ranging from US$1.25 to US$1.75/tonne, process costs of US$13/tonne and General & Administrative costs of US$4 per tonne were used to determine the 0.35 g/t Open Pit cut-off grade.|
|(2)||Gold grades were estimated in a 5m x 5m x 5m block model from capped 1.5m composites utilizing inverse distance cubed interpolation. Composites were caped up to 30 g/t depending on the individual mineralized domain.|
|(3)||Eugene Puritch, P.Eng, Fred Brown, P.Geo. and Antoine Yassa, P.Geo. from P&E Mining Consultants Inc., Qualified Persons under NI 43-101 who are independent of the Company, are responsible for the mineral resource estimates presented herein.|
|(4)||Mineral resources are reported inside an optimized pit shell and tabulated against a cut-off of 0.35 g/t Au.|
|(5)||Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.|
|(6)||The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred resources as an Indicated or Measured mineral resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured mineral resource category.|
|(7)||The mineral resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Definition Standards for Mineral Resources and Mineral Reserves prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council on November 27, 2010.|
For reference, an open pit mineral resource sensitivity at a 1.0 g/t cut-off grade was also calculated.
Table 6: Mineral Resource Estimate Sensitivity - 1.0 g/t Au Cut-Off
|Cut-off||Category||Tonnes||Grade (g/t)||Gold Ounces|
|1.0 g/t Au||Indicated||15,766,000||2.53||1,284,000|
The Vindaloo deposit open pit resources comprise a group of closely-spaced gold-mineralized structures that currently represent an approximate 4.8 km section of the Vindaloo Zone and a 0.9 km long section of the Madras NW zone. A simplified section of the Vindaloo deposit is presented in Figure 3.
The updated mineral resource calculation wire-frames and estimates were initially prepared by Klaus Kappenschneider, a contract employee of the Company and audited and edited by Eugene Puritch, P. Eng., Fred Brown, P. Geo. and Antoine Yassa, P. Geo. of P&E Mining Consultants Inc. ("P&E"), Qualified Persons under NI 43-101 who are independent of the Company.
The updated mineral resource statement is based on an additional 109 core and reverse circulation ("RC") holes, totalling 19,800 metres of drilling. The entire drill database contains 439 drill holes totalling 70,841 metres. All core and RC chip samples were analyzed at SGS's Ouagadougou and Syama laboratories. The procedures for handling drill core and RC drill chips were consistent with previous practice (see description at end) and are standard industry practices.
Figure 3: Typical Cross-Section through the Houndé deposit, Main Pit
Updated Technical Report
During 2012, P&E Mining Consultants Inc. and SRK were contracted to provide an updated resource estimate and PEA study, respectively. This work is in the process of being compiled into a NI 43-101 report titled "Technical Report and Preliminary Economic Assessment of the Houndé Gold Project, Burkina Faso, West Africa" which will be filed in SEDAR in late February 2013.
Houndé Drill Results - Fall 2012
Endeavour commenced an in-fill drill program in late October 2012 with a goal of converting all in-pit Inferred mineral resources to Measured and Indicated mineral resources. This program envisions approximately 450 holes totalling approximately 39,500 metres, of which, 228 holes totalling 26,978 metres have been completed. Results to date continue to demonstrate excellent continuity of the mineralized zones with assay values similar, or locally much better, than expected. In-fill drilling highlights, which are presented in table form in the Appendix, include several better than average intercepts as follows:
- 5.24 g/t Au over 34.0 metres
- 6.27 g/t Au over 43.2 metres
- 16.00 g/t Au over 8.1 metres
- 28.25 g/t Au over 6.8 metres
- 4.97 g/t Au over 47.0 metres
Management Conference Call Details
Endeavour's Management will host two conference calls to discuss the results of the Houndé PEA, 2012 Production Results and 2013 Guidance at times convenient for the North American and Australian time zones on January 23, 2013 and January 24, 2013. Both conference calls will include Neil Woodyer, Chief Executive Officer, Attie Roux, Chief Operating Officer, Christian Milau, Chief Financial Officer, and Don Dudek, Senior Vice President - Technical Services.
Analysts and interested investors are invited to participate using the dial in numbers below. The same dial in numbers will be used for both conference calls.
|North American toll-free:||+1 877-407-0832|
| The conference call can also be accessed through the following link:
| To accommodate the North American/European market, the first conference call will
be held and webcast by V-Call on Wednesday, January 23, 2013 at:
|10:00 am||in Vancouver|
|1:00 pm||in Toronto and New York|
|6:00 pm||in London|
|2:00 am||in Perth (Jan 24, 2013)|
|5:00 am||in Sydney (Jan 24, 2013)|
| To accommodate the Australian market, the second conference call will be held and
webcast by V-Call on Thursday, January 24, 2013 at:
|7:00 am||in Perth|
|10:00 am||in Sydney|
|3:00 pm||in Vancouver (Jan 23, 2013)|
|6:00 pm||in Toronto and New York (Jan 23, 2013)|
|11:00 pm||in London (Jan 23, 2013)|
The calls will be archived for later playback on Endeavour's website until January 24, 2014.
Endeavour will file the PEA on the Houndé Gold Project on www.sedar.com within 45 days of the date of this news release.
The PEA will be authored by the independent Qualified Persons who have verified the data in this news release.
|Dino Pilotto, P.Eng.||SRK Principal Consultant (Mining)|
|Bruce Murphy, FSIAMM||SRK Principal Consultant (Geotechnical Engineering )|
|Maritz Rykaart, P.Eng., Ph.D.||SRK Principal Consultant (Geotechnical Engineering)|
|Jim Yakasovich, P.Eng.||SRK Principal Consultant (Mining)|
|John Duncan, M.Eng., P.Eng.||SRK Principal Consultant (Water Resources Engineering)|
|Mark Liskowich, P.Geol.||SRK Principal Consultant (Environmental)|
|Adrian Dance, P.Eng.||SRK Principal Consultant (Metallurgy)|
|Eugene Puritch P.Eng.||P&E President and Principal Engineer|
|Antoine Yassa P.Geo.||P&E Sr. Associate Geologist|
|Fred Brown P.Geo.||P&E Sr. Associate Geologist|
Don Dudek, P.Geo, Senior Vice-President, Technical Services of Endeavour is a Qualified Person within the definition of that term in NI 43-101 and has supervised the preparation of the technical information contained in this news release.
About Endeavour Mining Corporation
Endeavour is a gold producer delivering growth. Endeavour owns three gold mines producing more than 300,000 ounces per year in Mali, Ghana and Burkina Faso that are generating significant operating cash flows to fund further expansion. Endeavour's gold production is forecast to exceed 550,000 ounces per year in 2016, including the Tabakoto mill expansion in 2013, completion of construction of Agbaou Gold Mine in Côte d'Ivoire scheduled for Q1 2014 and a recently completed PEA that shows potential for 161,000 ozs per year from the Houndé Project in Burkina Faso in 2016.
Endeavour Mining Corporation is listed on the TSX (symbol EDV) and ASX (symbol EVR), and also trades on the OTCQX (symbol EDVMF).
On behalf of Endeavour Mining Corporation
Chief Executive Officer
This news release contains "forward-looking statements" including but not limited to, statements with respect to Endeavour's plans and operating performance, the estimation of mineral resources, the timing and amount of estimated future production, costs of future production, future capital expenditures, and the success of exploration activities. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "expects", "expected", "budgeted", "forecasts" and "anticipates". Forward-looking statements, while based on management's best estimates and assumptions, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the successful integration of acquisitions; risks related to international operations; risks related to general economic conditions and credit availability, actual results of current exploration activities, unanticipated reclamation expenses; changes in project parameters as plans continue to be refined; fluctuations in prices of metals including gold; fluctuations in foreign currency exchange rates, increases in market prices of mining consumables, possible variations in mineralized resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; delays in the completion of development or construction activities, changes in national and local government regulation of mining operations, tax rules and regulations, and political and economic developments in countries in which Endeavour operates. Although Endeavour has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Please refer to Endeavour's most recent Annual Information Form filed under its profile at www.sedar.com for further information respecting the risks affecting Endeavour and its business.
Appendix: Recent Houndé In-fill Drilling Highlights (fall 2012)
|Hole #||mineralized interval (m)||TW (m)||Au (ppm)||Au (capped)||Zone||section|
Houndé Project Sample Handling Procedures
Endeavour's procedures at Houndé for handling reverse circulation drill chips comprise initial splitting of the rock chips from one metre drill length samples into 2.0 kg samples, as well as description and logging into a database. Core samples are handled in a similar fashion with mineralized intervals sawn in half and the right hand portion of the sample placed in samples bags for analysis. The RC samples, and core samples, are subsequently delivered to representatives of SGS Laboratories in Ouagadougou. Assay standard samples are inserted every 25th sample and duplicate reverse circulation from every 20th sample are sent in as a separate sample to double check the assays from these intervals. This sampling procedure was initiated and periodically reviewed by Endeavour's Senior Vice President Technical Services, Don Dudek, P. Geo. The assay samples are then crushed to 3 mm with a riffle split if required, to 1.5 kg, the entire sample milled in a LM2 mill to a nominal 95% passing 75μm. All the preparation equipment is flushed with barren material prior to the commencement of the job and all sample bowls are scrapped clean with a scratch pad. Gold values were determined by Fire Assay and AAS with a 50 gram nominal sample weight. In order to ensure that local, exceptionally high grade assays are not overly represented in assay composites Endeavour is also presenting assay composites, with high grade samples capped at 30.0 g/t Au, which is the capping level deemed appropriate for the initial samples from the Vindaloo and Madras NW zones and consistent with previous practice on the property.
SOURCE: Endeavour Mining Corporation
For further information:
Vice President - Investor Relations
+1 604 609 6117
UK/Europe: Bobby Morse
+44 20 7466 5000
Australia: David Ikin
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