5.1 Moz Ore Reserve* and a 15 Year Mine Life with early payback
TORONTO, Oct. 28, 2019 (GLOBE NEWSWIRE) -- Cardinal Resources Limited (ASX / TSX : CDV) (“Cardinal” or “the Company”) is pleased to announce the results of the Feasibility Study (“FS”) for the Namdini Gold Project (“Namdini” or the “Project”) in Ghana, West Africa. The FS confirms Namdini as a gold project with attractive economic returns.
- 5.1 million ounces (Moz) Ore Reserve* (Pre-Feasibility Study♦ (PFS) 4.76 Moz┼)
- 421,000 oz in first 12 months (PFS 420,000 oz); 1.1 Moz forecast for first 3 years of full production
- US$1.46 billion in undiscounted, pre-tax free cashflow forecast with the current life of mine (LOM) plan of 15 years at US$1,350/oz (US$2.05 billion undiscounted, pre-tax free cashflow at US$1,500/oz)
- US$324 million in undiscounted, pre-tax free cashflow, forecast during 1st Year of full production at US$1,350/oz (US$384 million first year pre-tax free cashflow at US$1,500/oz)
- US$348 million capital expenditure (CAPEX) plus US$42 million contingency allowed with a robust level of accuracy of +15/-5% (PFS US$414 million total Capex; +30/-20% accuracy)
- CAPEX payback of 21 months at US$1,350/oz (12 months at USD$1,500/oz); driven by early higher grades and recoveries, low strip ratio and low costs, within the starter pit
- Low all-in sustaining costs (AISC) of US$585 during CAPEX payback (PFS US$599)
- Pit design LOM Strip Ratio 1.9:1 (PFS 1.4:1); Starter pit Strip Ratio of 0.9:1; LOM pit design based on US$1,235/oz (PFS US$1,105/oz)
- Financial Model based on US$1,350/oz for 15 years (PFS US$1,250/oz)
- 4.2 Moz (130 metric tonnes) produced over 15 years (PFS 3.9 Moz); AISC US$895/oz (PFS US$769/oz)
- Aachen Process Technology has been adopted to provide economic benefits via operating cost savings; 85% gold recovery during first three years; 83% gold recovery for current LOM plan
- Namdini 9.5 Mtpa gold project is based upon a single, large open-pit with a conventional process plant design; crush, grind, float, regrind, high shear oxidation (AachenTM) and carbon in leach (CIL)
- First gold pour targeted for H2 2022 (subject to financing in H1 2020)
- Namdini Project Net Present Value (NPV) and Internal Rate of Return (IRR) at US$1,350/oz:
|Net Present Value (NPV5)||Internal Rate of Return (IRR)|
- Cardinal’s Board has approved this Feasibility Study and plans to further de-risk the project by commencing the Front End Engineering Design (FEED) programme and further enhancement of the Project Execution Plan (PEP). Early site works and advancement of engineering towards construction, will be funded through Cardinal’s strong cash position of circa A$27 million.
* 138.6 Mt @ 1.13 g/t Au; 0.5 g/t cut-off, inclusive of 0.4Moz Proved (7.4 Mt @ 1.31 g/t Au) and 4.7Moz Probable (131.2 Mt @ 1.12 g/t Au); 0.5 g/t Au cut-off.
♦ Pre-Feasibility Study (PFS) released on ASX / TSX 18th September 2018
┼ 129.6 Mt @ 1.14 g/t Au; 0.5 g/t cut-off, inclusive of 4.76 Moz Probable (129.6 Mt @ 1.14 g/t Au); 0.5 g/t Au cut-off.
Project Sensitivity Analysis
Sensitivity to US$ Gold Price; Pre and Post-Tax
Capital Cost Estimate
The following table compares the major Project parameters for the FS with those for the PFS:
|Direct||FS ($US Million) |
|PFS ($US Million) |
|Infrastructure & Utilities||57||76|
|Indirect||FS ($US Million)||PFS ($US Million)|
|Engineering & Contractors||36||37|
|Total Capital Cost||390||414|
Sensitivity of Project Outcomes to US$ Gold Price; Pre-Tax
Sensitivity of Project Outcomes to US$ Gold Price; Post-Tax
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|
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 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 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
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.
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:
- FEED and PEP programmes incorporating Whittle Consulting’s mine and schedule optimisation plan.
- OPEX savings by evaluating a flotation cleaner circuit; potential to reduce required regrind power.
- Additional Mineral Resources that are not part of the current Ore Reserve which represent lateral strike and depth extensions to the current LOM pit design at US$1,235/oz. Subject to the outcome of additional drilling beyond the current pit design, any economic discovery not in the current mine plan may extend the life of the current mine plan which may also include a new underground mine plan.
- The Regional land package may also have potential to define satellite pits with close proximity to Namdini. Recent results from drilling completed within the Ndongo Project, located approximately 24 km north of Namdini are within hauling distance.2 Drill testing new zones of high-grade gold mineralisation to define satellite pits will recommence soon.
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
Cardinal Resources Limited (ASX/TSX: CDV) 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.
For further information contact:
|Archie Koimtsidis |
CEO / MD
Cardinal Resources Limited
P: +61 8 6558 0573
|Alec Rowlands |
IR / Corp Dev
Cardinal Resources Limited
P: +1 647 256 1922
|Cannings Purple |
Andrew Rowell or Peta Baldwin
Technical Report – NI 43-101
A Technical Report on the Feasibility Study prepared in accordance with NI 43-101 of the Canadian Securities Administrators will be available on SEDAR at www.sedar.com within 45 days, which will expand on the attached Technical Summary.
Feasibility Study Accuracy
This Feasibility Study has achieved an overall accuracy of +/- 15% on the following basis:
- Detailed geologic and mine engineering work has been conducted to define a Mineral Resource and Ore Reserve.
- Detailed testwork has been completed to develop all mining and processing parameters for pit slope design, hydrology, geotechnical, flow sheet development, equipment selection and sizing, consumables and power consumption, material balance, general arrangement drawings, production and development schedules, capital and operating cost estimates.
- Capital and operating cost estimates have been derived from take-offs and full vendor quotes.
- An Environmental Impact Statement (EIS) has been submitted to the Ghanaian regulatory body.
- The right to mine can be reasonably expected to be granted (allowed by NI 43-101 and JORC to declare Ore Reserves). Cardinal has been granted a 15 year Mining Lease for Namdini.
- Economic analysis with sensitivities is based on annual cash flow calculations for the mine life.
- For the purposes of The Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) this Feasibility Study is “a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate, at the time of reporting, that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre-Feasibility Study.”
Key inputs for the Namdini FS are based upon the following recent studies:
- A revised Mineral Resource estimate, compiled by MPR Geological Consultants Pty Ltd (Perth WA), as disclosed in the announcement “Cardinal’s Namdini Ore Reserve Now 5.1 Moz” released to the ASX and TSX on 3 April 2019
- A Proved and Probable Ore Reserve as disclosed in the announcement “Cardinal’s Namdini Ore Reserve Now 5.1 Moz” released to the ASX and TSX on 3 April 2019, along with detailed monthly mining and processing schedules derived entirely from the Ore Reserve produced by Golder Associates Pty Ltd (“Golder”, Perth WA) after the application of mining parameters, ore haulage costs based on in-country mining contractor inputs and owner-mining cost models, processing inputs and geotechnical pit design considerations
- Updated cut-off grade parameters, with the 0.5 g/t Au cut-off grade estimate remaining the same as disclosed in the announcement “Cardinal’s Namdini Ore Reserve Now 5.1 Moz” released to the ASX and TSX on 3 April 2019
- Geotechnical inputs and parameters for the LOM pit design by Golder (Perth) as disclosed in the announcement “Cardinal’s Namdini Pre-Feasibility Study” to the ASX and TSX on 18 September 2018
- Process engineering design, capital and operating costs by Lycopodium Minerals Pty Ltd, Perth as disclosed in this announcement
- Metallurgical recovery inputs based on testwork by ALS Global (Perth) as disclosed in the announcement “Cardinal’s Namdini Pre-Feasibility Study” to the ASX and TSX on 18 September 2018 and recent testwork results from Maelgwyn Mineral Services Africa (Johannesburg, South Africa) and interpreted by Independent Metallurgical Operations (IMO, Perth) as disclosed in the announcement “Positive Metallurgical Update on the Namdini Project” to the ASX and TSX on 4 June 2019 and in this announcement
- Process infrastructure design including and not limited to, waste, residue, tailings storage and water management design by Knight Piésold Consulting (Perth) as disclosed in this announcement
- Other cost inputs (e.g. power, administration and accommodation) by Cardinal’s team using inputs from external consultants as disclosed in this announcement
- The status of the social and environmental approvals, mining tenements, other government factors and other infrastructure requirements for the selected mining method remains the same as disclosed in the announcement “Cardinal’s Namdini Pre-Feasibility Study” to the ASX and TSX on 18 September 2018
- The FS financial model as disclosed in this announcement was verified by independent accounting company, BDO Advisory Pty Ltd, Perth
- 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 US1,550 per ounce traded during September 2019
Competent and Qualified Person Statements
All production targets for the Namdini Project referred to in this Report are underpinned by Mineral Resource and Ore Reserve estimates which were prepared by Competent Persons in accordance with the requirements of the JORC Code and who are also Qualified Persons in accordance with NI 43-101 respectively.
The information in this press release that relates to process plant, infrastructure, and capital costs is based on information compiled and reviewed by Mr David Gordon, who is a Fellow of the AusIMM and a full-time employee of Lycopodium Minerals Ltd (Lycopodium). Mr Gordon has sufficient experience which is relevant to the activity which he has undertaken to be a Competent Person as defined in the JORC Code (2012) and a Qualified Person for the purposes of NI 43-101. He has no economic, financial or pecuniary interest in the Company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
The information in this press release that relates to Ore Reserves and mining studies is based on information compiled and reviewed by Mr Glenn Turnbull, who is a Chartered Engineer, a Fellow of the Institute of Materials, Minerals and Mining, a Member of the Australasian Institute of Mining and Metallurgy, and an employee of Golder Associates Pty Ltd (Golder). Mr Turnbull has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to be a Competent Person as defined in the JORC Code (2012) and a Qualified Person for the purposes of NI 43-101. He has no economic, financial or pecuniary interest in the Company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
The information in this press release that relates to Mineral Resources is based on information compiled and reviewed by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists and a full-time employee of MPR Geological Consultants Pty Ltd (MPR). Mr Johnson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he has undertaken to be a Competent Person as defined in the JORC Code (2012) and a Qualified Person for the purposes of NI 43-101. He has no economic, financial or pecuniary interest in the Company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
Scientific and technical information contained in this press release that pertains to metallurgical results and interpretations has been reviewed by Mr Daryl Evans, who is a Fellow of the AusIMM and a full-time employee of Independent Metallurgical Operations Pty Ltd (IMO). Mr Evans has sufficient experience which is relevant to the activity which he has undertaken to be a Competent Person as defined in the JORC Code (2012) and a Qualified Person for the purposes of NI 43-101. He has no economic, financial or pecuniary interest in the Company and consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
The scientific and technical information in this press release that relates to Exploration Results, Mineral Resources and Mineral Ore Reserves at the Namdini Gold Project has been reviewed and approved by Mr. Richard Bray, a Registered Professional Geoscientist with the Australian Institute of Geoscientists and Mr. Ekow Taylor, a Chartered Professional Member with the Australasian Institute of Mining and Metallurgy. They each have more than five years’ experience relevant to the styles of mineralisation and type of deposits under consideration and to the activity which is being undertaken to be a Competent Person as defined in the JORC Code (2012) and a Qualified Person for the purposes of NI 43-101. Mr. Bray and Mr. Taylor are full-time employees of Cardinal Resources Ltd (Cardinal) and hold equity securities in the Company.
NOTE: The Competent Persons signing this press release have been advised that Cardinal has all permits required to conduct the proposed work on the Project. The authors of the attached Technical Summary and the other signatories are not aware of any specific environmental liabilities on the Project. They consider that Cardinal has all permits required to conduct the proposed work on the Project. They are not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform ongoing work programmes on the Project.
Feasibility Study Parameters – Cautionary Statement
The term ‘Ore Reserve’ is synonymous with the term ‘Mineral Reserve’ as used by Canadian National Instrument 43-101 ‘Standards of Disclosure for Mineral Projects’ (NI 43-101, 2014) and conforms with CIM (2014). The JORC Code (2012) is defined as an ‘acceptable foreign code’ under NI 43-101.
The FS referred to in this announcement is based upon a Proved and Probable Ore Reserve derived from Measured and Indicated Mineral Resources. No Inferred Mineral Resource is included in the estimation of Ore Reserves. The Company advises that the Proved and Probable Reserve provides 100% of the total tonnage and 100% of the total gold metal underpinning the forecast production target and financial projections. No Inferred Mineral Resource is included in the Life of Mine plan.
Project approval and development remains subject to market conditions, project financing, and Board and regulatory approvals. There is no certainty that the FS or the Ore Reserve from which it was derived will result in commercial production or the assumptions used in the FS and resulting economic outcomes that are included in this announcement will be realised.
Unless otherwise stated, all cash flows are in US dollars and are not subject to inflation/escalation factors and all years are calendar years. The FS has been prepared to an overall capital expenditure level of accuracy of approximately +15% to -5%. This announcement has been prepared in accordance with the JORC Code (2012) and the current ASX Listing Rules and in compliance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators (CIM, 2014).
The Company has concluded that it has a reasonable basis for providing forward-looking statements included in this announcement. The detailed reasons for this conclusion are outlined throughout this announcement. Your attention is drawn to the preceding Cautionary Statement, the following Disclaimer and the following Forward-looking Statements.
No New Information or Data
Cardinal confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources and Ore Reserves, which all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not materially changed from the original market announcement.
This ASX / TSX press release has been prepared by Cardinal Resources Limited (ABN:56 147 325 620). Neither the ASX or the TSX, nor their regulation service providers accept responsibility for the adequacy or accuracy of this press release.
This press release contains summary information about Cardinal, its subsidiaries and their activities, which is current as at the date of this press release. The information in this press release is of a general nature and does not purport to be complete, nor does it contain all the information which a prospective investor may require in evaluating a possible investment in Cardinal.
By its very nature, exploration for minerals is a high‐risk business and is not suitable for certain investors. Cardinal’s securities are speculative. Potential investors should consult their stockbroker or financial advisor. There are a number of risks, both specific to Cardinal and of a general nature which may affect the future operating and financial performance of Cardinal and the value of an investment in Cardinal including but not limited to economic conditions, stock market fluctuations, gold price movements, regional infrastructure constraints, timing of approvals from relevant authorities, regulatory risks, operational risks and reliance on key personnel and foreign currency fluctuations.
Except as required by applicable law, the Company is under no obligation to update any person regarding any inaccuracy, omission or change in information in this press release or any other information made available to a person nor any obligation to furnish the person with any further information. Recipients of this press release should make their own independent assessment and determination as to the Company’s prospects, its business, assets and liabilities as well as the matters covered in this press release.
Certain statements contained in this press release, including information as to the future financial or operating performance of Cardinal and its projects may also include statements which are ‘forward‐looking statements’ that may include, amongst other things, statements regarding targets, estimates and assumptions in respect of mineral resources and anticipated grades and recovery rates, production and prices, recovery costs and results, capital expenditures and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions. These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Cardinal, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies and involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in such forward‐looking statements.
Cardinal does not intend to update publicly or release any revisions to any forward‐looking statements, whether as a result of new information, future events, circumstances or results or otherwise after today’s date or to reflect the occurrence of unanticipated events, other than required by the various Corporations Acts, and ASX and TSX Listing Rules. The words ‘believe’, ‘expect’, ‘anticipate’, ‘indicate’, ‘contemplate’, ‘target’, ‘plan’, ‘intends’, ‘continue’, ‘budget’, ‘estimate’, ‘may’, ‘will’, ‘schedule’ and similar expressions identify forward‐looking statements.