Cardinal Resources Limited (ASX:CDV) (TSX : CDV) is pleased to announce the results of the Feasibility Study for the Namdini Gold Project in Ghana, West Africa. The FS confirms Namdini as a gold project with attractive economic returns.
HIGHLIGHTS
Net Present Value (NPV5) | Internal Rate of Return (IRR) | ||
Pre-tax | US$914 Million | 43.0% | |
Post-tax | US$590 Million | 33.2% |
* 138.6 Mt @ 1.13 g/t Au; 0.5 g/t cut-off, inclusive of 0.4Moz Proved (7.4 Mt @ 1.31 g/t Au) and 4.7Moz Probable (131.2 Mt @ 1.12 g/t Au); 0.5 g/t Au cut-off.
♦ Pre-Feasibility Study (PFS) released on ASX / TSX 18th September 2018
┼ 129.6 Mt @ 1.14 g/t Au; 0.5 g/t cut-off, inclusive of 4.76 Moz Probable (129.6 Mt @ 1.14 g/t Au); 0.5 g/t Au cut-off.
Project Sensitivity Analysis
Sensitivity to US$ Gold Price; Pre and Post-Tax
https://www.globenewswire.com/NewsRoom/AttachmentNg/26eaaa2d-9eea-4ed7-bde3-dd4261838490
Capital Cost Estimate
The following table compares the major Project parameters for the FS with those for the PFS:
Direct | FS ($US Million)
+15/-5% accuracy |
PFS ($US Million)
+30/-20% accuracy |
Process Plant | 230 | 205 |
Infrastructure & Utilities | 57 | 76 |
Sub-total direct | 287 | 281 |
Indirect | FS ($US Million) | PFS ($US Million) |
Engineering & Contractors | 36 | 37 |
Owners costs | 25 | 35 |
Sub-total indirect | 61 | 72 |
Contingency | 42 | 61 |
Total Capital Cost | 390 | 414 |
Sensitivity of Project Outcomes to US$ Gold Price; Pre-Tax
https://www.globenewswire.com/NewsRoom/AttachmentNg/453f2fdf-dcff-45d1-bc4e-e82d9ccf1035
Sensitivity of Project Outcomes to US$ Gold Price; Post-Tax
https://www.globenewswire.com/NewsRoom/AttachmentNg/d2531dd3-fd09-4fb2-97a7-24cd07f447d3
US Dollar Gold Price Sensitives
The FS has been evaluated at a gold price of USD$1,350 per ounce. The average US$ gold price per gold ounce for the period from October 2017 to current day was US$1,387 per ounce. During the period, the US dollar gold price has been in steady uptrend from a low of US$1,177 in August 2018 to a high of US$1,550 per ounce traded during September 2019.
Key Technical and Financial Outcomes
The key technical and financial outcomes from the FS on a 100% basis are summarised in the following tables. Further details are provided in the Appendix to this announcement.
Financial Summary for 9.5 Mtpa throughput (based upon a gold price of US$1,350/oz)
KEY ECONOMIC RESULTS | UNIT | FEASIBILITY STUDY | |
Capital cost (including 11% contingency) | US$ M | 390 | |
All-in Sustaining Cost (AISC)1 | Starter Pit | US$/oz | 585 |
Life of Mine | US$/oz | 895 | |
Total Project payback | Months | 21 | |
Pre-Tax NPV US$ (5% discount rate) | US$ M | 914 | |
Post-Tax NPV US$ (5% discount rate) | US$ M | 590 | |
Pre-Tax IRR | % | 43 | |
Post-Tax IRR | % | 33 |
Table Notes:
1 Cash Costs + Royalties + Levies + Life of Mine Sustaining Capital Costs (World Gold Council Standard)
Royalties calculated at a rate of 5.5% and a corporate tax rate of 32.5%; both subject to negotiation, and expected to be finalised over coming months.
Starter Pit Production Summary
KEY ESTIMATED PRODUCTION RESULTS | UNIT | FEASIBILITY STUDY |
Gold price | US$/oz | 1,350 |
Gold produced (average for full production years) | (koz/yr) | 361 |
Gold head grade (Starter Pit, Ore Reserve) | g/t Au | 1.41 |
Gold recovery (Starter Pit) | % | 85 |
Strip ratio (Starter Pit) | W:O | 0.9 :1 |
Ore mined (0.5 g/t cut-off grade) | Tonnes (Mt) | 47 |
Waste mined | Tonnes (Mt) | 43 |
Starter Pit life (including ramp-up) | Months | 27 |
Total Project payback | Months | 21 |
LOM Production Summary (including Starter Pit)
KEY ESTIMATED PRODUCTION RESULTS | UNIT | FEASIBILITY STUDY |
Gold price | US$/oz | 1,350 |
Gold produced (average for LOM full production years) | (koz/yr) | 287 |
Gold produced (LOM) | (Moz) | 4.2 |
Gold head grade (LOM, Ore Reserve) | g/t Au | 1.13 |
Gold recovery (LOM) | % | 83 |
Strip ratio (LOM) | W:O | 1.9 : 1 |
Ore mined (0.5 g/t cut-off grade) | Tonnes (Mt) | 138.6 |
Waste mined | Tonnes (Mt) | 263 |
Mine life (Including ramp-up and mine closure) | years | 15 |
Capital cost (including 11% contingency) | US$ M | 390 |
Total Project payback | Months | 21 |
Production Profile and LOM AISC
https://www.globenewswire.com/NewsRoom/AttachmentNg/7ae631ec-43ff-470c-8bb2-5fc15ca76f6f
Ongoing Activity
The activities summarised in the Project development schedule below are subject to favourable timelines for finalising project funding, permitting, contracting and procurement.
Further Project optimisation and regional exploration
In conjunction with moving the Project toward a financial investment decision, work continues on further project optimisation and regional exploration utilising Cardinal’s strong cash at bank of approximately A$27 million.
Cardinal’s ~900 km2 of prospective exploration tenure within hauling distance of the proposed Namdini gold production plant remains a short-term opportunity for project enhancement.
Exploration activities, including drilling, will recommence shortly with the stated aim of identifying shallow, high grade deposits that can augment existing Namdini ore to further enhance the current project economics. Recent positive results from exploration activities, for example at Ndongo East1, provide encouragement that higher grade gold systems may exist in the region within trucking distance to the Namdini deposit.
Funding and Strategic Alternatives
Cardinal’s Board has approved this Feasibility Study and recommends progressing the Project to construction pending successful completion of financing activities.
The Company has been actively working with its appointed debt advisor, Cutfield Freeman & Co (London) to secure Project debt finance on competitive terms and continues to assess various funding options.
In early 2019, the Company commenced Project finance discussions with a number of Australian and International Banking groups from which the Company received a number of preliminary (non‐binding) financing term sheets. Discussions with these interested financial institutions have progressed where financial and technical due diligence has commenced, with a data room prepared and accessed, with several technical site visits already conducted. Review of financing options for the Namdini Project will be completed in due course following the Feasibility Study.
In addition to traditional financing solutions, the Company is concurrently evaluating strategic alternatives to bring the project into production with a view to maximising economic outcomes for Cardinal shareholders.
A final financing decision will be made at a time assessed as most appropriate and beneficial to the Company.
In the meantime, the Company remains in a strong financial position with cash reserves of approximately A$27 million.
____________
1 Refer to the announcements “Cardinal Intercepts High‐Grade Shallow Gold at Ndongo East” released to the ASX and TSX on 27 March 2019 and “Cardinal Reports Further Shallow High‐Grade Gold at Ndongo East” released to the ASX and TSX on 10 July 2019.
Opportunities
The FS demonstrates a viable, globally significant, long-life gold project at Namdini. Potential remains for further improvements in Project economics which will form the basis of ongoing evaluation work, including:
Archie Koimtsidis, Managing Director and Chief Executive Officer, commented:
“Cardinal’s Technical Team, led by our Chief Operating Officer Dave Anthony, along with Lycopodium, Golders and various study managers, have delivered a compelling and robust technical and economic outcome, paving the way for our planned development of the Namdini Gold Project.
With over 1 million ounces slated for production in the first three years; 421,000 oz in Year 1 alone, and an average annual gold production of 287,000 oz over a 15-year mine life, Namdini ranks amongst the world’s largest known, financially robust, undeveloped gold projects.
Namdini has a 5.1 Moz Ore Reserve that is projected to generate US$1.46 billion in undiscounted, pre-tax free cashflow over 15 years including US$324 million in undiscounted, pre-tax free cashflow during its 1st Year of full production, based on a gold price of US$1,350, which is significantly below the current spot gold price.
Since the discovery of Namdini in 2015, we have continued to be focused on de-risking the project and have reached a robust Project CAPEX accuracy level of +15/-5% for this Feasibility Study. Unlike whole of ore gold processing plants, we have the benefit of being able to produce a concentrate for gold extraction on site which means that we have a much smaller back half of the plant providing a huge positive impact on capital costs. Economic and technical optimisation confirms a large, single open-pit utilising a conventional process plant with a throughput of 9.5 Mtpa and a very attractive 24-month debt payback.
On a social level, Namdini is poised to become the first large scale operating mine in the Upper East Region of Ghana, delivering sustainable prosperity and opportunities to all stakeholders. We are grateful for the continued overwhelming support of these communities and their elders along with the Government of Ghana to bring this project into production.”
____________
2 Refer to the announcements “Cardinal Intercepts High‐Grade Shallow Gold at Ndongo East” released to the ASX and TSX on the 27 March 2019 and “Cardinal Reports Further Shallow High‐Grade Gold at Ndongo East” released to the ASX and TSX on the 10 July 2019
About Cardinal
Cardinal Resources Limited is a West African gold‐focused exploration and development Company which holds interests in tenements within Ghana, West Africa.
The Company is focused on the development of the flagship Namdini Gold Project.
Exploration programmes are also progressing at the Company’s Bolgatanga (Northern Ghana) and Subranum (Southern Ghana) Projects.
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