Natougou Project

The Natougou advanced gold deposit is situated within the Tapoa Permit Group, approximately 320 kilometers east of Ouagadougou, which is located within the Birimian Gold Province in Burkina Faso. The Tapoa Permit Group comprises four contiguous exploration permits, namely Dangou, Pambourou, Boungou and Bossari, which together total 772 square kilometers. The Birimian Gold Province hosts most of the major gold deposits in West Africa notably in Ghana, Côte d’Ivoire, Mali, Senegal and Burkina Faso.

Feasibility Study Highlights

On February 25, 2016, we announced a positive feasibility study for Natougou. The technical report has been filed on www.sedar.com or can be accessed here.

  • During the first three years
    • Average annual production of more than 226,000 ounces
    • Average total cash cost1 of $283/oz and all-in sustaining cost2 of $374/oz
    • Average head grade of 5.72 g/t at a gold recovery rate of 93.8%
  • Production of some 1.2 million ounces at total cash cost of $408/oz and a gold recovery rate of 92.9% over a projected mine life (“LOM”) in excess of 7 years
  • LOM all-in sustaining cost of $518/oz including capitalized stripping and sustaining capital expenditures
  • Maiden open pit mineral reserves of 9.6 million tonnes at a grade of 4.15 g/t Au for 1,276,000 ounces of contained gold
  • Initial capital expenditures: $219 million, which includes $42 million in pre-stripping expenditures and an $18-million contingency
  • Project economics (base case at $1,100/oz):
    • After-tax 5% NPV: $262 million
    • After-tax IRR: 48%
    • Payback period: 1.5 years
  • Targeted construction start-up: year-end 2016
  • Expected first gold pour: second half of 2018 with first year of full production in 2019

1 Total cash cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the mining operation expenses and government royalties per ounce sold.
2 All-in sustaining cost is a non-IFRS financial performance measure with no standard definition under IFRS and represents the total cash cost, plus sustainable capital expenditures and stripping costs per ounce.

Natougou Development

In the third quarter, the Corporation made steady progress with regard to the Natougou Project and continues to target construction start-up by year-end 2016. As at November 8, 2016, the following milestones have been achieved:

  • Development on time and budget, with $7.7 million spent as at September 30, 2016
  • Detailed design and engineering 37% complete
  • Procurement:
    • Supplier selected for earthworks and contract mining
    • Issue of purchase orders for comminution equipment and seven other packages
    • Award of contracts for resettlement action plan follow-up
  • Hiring of key personnel for the construction team has commenced
  • Permitting is in line for receipt by year-end 2016 

Exploration

The initial 2016 budget of $6 million for the Tapoa (Natougou) project was increased to $9 million, and now consists of 60,000 meters of auger, 28,500 meters of RC and 6,000 meters of core drilling.  In the third quarter, we completed a total of 8,360 meters in 86 RC holes across the Tapoa Permit Group. In addition, 1,210 meters of drilling, including 3 core holes, were conducted.

During the third quarter of 2016, we completed an airborne magnetic radiometry survey totalling 4,430 line kilometers over the Tapoa Permit Group. Data from all previously conducted surveys were subsequently compiled in order to produce a full coverage mapping. As shown on the below aeromagnetic map (Figure 1), the Natougou deposit is located to the northwest of a plus 45-degree oriented regional structure. The structure, dubbed Trend 045, is an important deep-seated deformation zone that may have played a role in the formation of the deposit. A series of lineaments are observed across the entire property within a two- to four-kilometer wide corridor. The lineaments were combined with mapping, soil geochemistry, auger drilling and trenching, which enabled us to identify targets and commence an RC drill program in the fourth quarter of 2016. Two RC drill rigs are currently in operation on the Tapoa proximal area.

Figure 1 - Aeromagnetic Map

West Sector and Boungou Shear Zone

A portion of the RC drilling in the quarter focused on defining the limits of the footwall zone below the Boungou Shear Zone within the pit area and extending the west flank mineralized zone of the Boungou Shear Zone. In addition, three core holes were drilled within the hangingwall zone. At this stage, our objective with regard to the hangingwall zone is to better understand the style of the mineralization, which seems to be different from the Boungou Shear Zone.

In the fourth quarter, we intend to complete a drill program at 80-meter spacing in order to bring the west flank mineralized zone into the inferred resources category by year-end.