Cora Gold Limited / EPIC: CORA.L / Market: AIM / Sector: Mining
21 November 2022
Cora Gold Limited ('Cora' or 'the Company')
Sanankoro Gold Project: Optimised Project Economics
& Investor Presentation
Cora Gold Limited, the West African focused gold company, is pleased to announce Optimised Project Economics following the announcement of Maiden Reserves and completion of a Definitive Feasibility Study ('DFS') for its flagship Sanankoro Gold Project ('Sanankoro' or the 'Project') in southern Mali (see announcement dated 21 November 2022).
Highlights
● Optimised Project Economics (post tax, based on a gold price of US$1,750/oz) and Maiden Probable Reserve of 422koz @ 1.3 g/t Au:
○ 52.3% internal rate of return ('IRR')
○ 1.2 year payback period
○ US$71.8m first full year free cash flow ('FCF')
○ US$234m FCF over life of mine ('LOM')
○ US$997/oz all-in sustaining costs ('AISC')
○ 6.8 years Reserve mine life
○ 56,000oz pa average production
○ US$90m pre-production capital (including mining pre-production & contingencies)
● The optimisations to the DFS were focused on capital expenditure savings which have delivered improved Project economics
● Solar hybrid power option incorporated into the plant design, delivering savings in both operating costs and carbon emissions.
● 121koz of pit optimised Inferred Resources, using the same parameters as Reserves, offer potential for an additional 2.5 years of mine life and US$76m additional FCF (based on a gold price of US$1,750/oz). Further infill drilling should, in time, enable the conversion of these Resources to Reserves.
● Significant potential upside from Exploration Target estimated to contain between 26.0 Mt and 35.2 Mt with a grade range of 0.58 - 1.21 g/t Au for a potential 1,370koz Au.
● Lionhead Capital Advisors Proprietary Limited ('Lionhead') has confirmed continued support for the Project and is in discussions around a term sheet for up to US$30m.
Bert Monro, Chief Executive Officer of Cora, commented, " The Optimised Project Economics, worked on concurrently with the completion of the DFS, have delivered a project with 52% IRR, 1.2 year payback and with US$234m of free cash flows being generated over the Reserve mine life.
"Sanankoro benefits from a low strip ratio mine plan focused on oxide ore which helps deliver a low technical risk project. The Company also has considerable further upside potential with pit optimised Resources, using the same parameters as the Reserves, adding 2.5 years to the existing 6.8 year Reserve mine life and US$76m free cash flows. In addition, as recently announced, Sanankoro has an Exploration Target that shows the potential for up to an additional 1,370koz Au within 8km of existing pits, offering significant future growth.
"Investment firm Lionhead has confirmed to the Company its continued support to fund the future development of Sanankoro. The Company and Lionhead are in constructive discussions in respect of the arrangement for a funding package of up to US$30 million. Furthermore, we have started discussions with a number of potential lenders to support the Lionhead term sheet to fully fund the Project. The Company anticipates providing further updates on these fundings in due course."
Optimised Study - Summary of Results
The key results and financial outcomes following the optimisations are set out in the table below:
|
| Values based on a gold price of … | |
| Parameters | US$1,750/oz | US$1,650/oz |
| Construction period 1 (months) | 21 | |
| Life of Mine ('LOM') (years) | 6.8 | |
| LOM waste mined (kt) | 46,564 | |
| LOM ore mined (kt) | 10,094 | |
| Strip ratio (waste : ore) | 4.61 : 1 | |
| LOM grade processed (g/t Au) | 1.30 | |
| Average gold recovery | 90.1% | |
| LOM production (koz) | 380 | |
| Average production (koz pa) | 56 | |
| Average Free Cash Flow post tax (US$m pa) | 34.3 | 30.3 |
| LOM Free Cash Flow post tax (US$m) | 234 | 207 |
| Mining costs (US$/t ore) | 15.80 | |
| Processing & maintenance costs (US$/t ore) | 10.00 | |
| General & administration plus other costs to mine gate (US$/t ore) | 3.10 | |
| Payback period post tax from start of operations (years) | 1.2 | 1.3 |
| Pre-production capital (US$m) (including US$9m mining pre-production & US$6m contingency) | 90 | |
| Sustaining capital 2 (US$m) | 58 | |
| Average cash cost (US$/oz Au) | 771 | |
| Average AISC (US$/oz Au) | 997 | 992 |
| IRR pre-tax | 62.0% | 52.6% |
| IRR post tax | 52.3% | 43.6% |
| NPV8 pre-tax (US$m) | 135.8 | 109.1 |
| NPV8 post tax (US$m) | 95.1 | 74.8 |
1 includes pre-construction engineering work and commissioning the plant
2 includes closure costs
Optimised Study - Capital and Operating Costs
Pre-production capital cost of US$90m, including US$9m mining pre-production and US$6m contingency.
The pre-production capital cost estimate is based on a contractor mining scenario and therefore excludes capital costs associated with a mining fleet.
| Capital items | US$'000 |
| Civil works | 5,122 |
| Earth works | 3,513 |
| Machinery & equipment | 31,704 |
| Infrastructure | 1,194 |
| Transport | 5,432 |
| First fills | 868 |
| Mine camp | 2,206 |
| ESIA channels | 2,859 |
| Project management | 4,500 |
| Insurance & guarantees | 650 |
| Generator / thermal plant | 250 |
| Tailings storage facility ('TSF'; phase 1) | 11,895 |
| Resettlement action plan | 1,000 |
| Owners costs | 3,814 |
| Mining pre-production | 8,941 |
| Contingency | 5,838 |
| Total pre-production capital | 89,787 |
| Sustaining & closure capital | 57,868 |
| Total LOM capital | 147,655 |
An estimated LOM average AISC of US$997/oz based on a gold price of US$1,750/oz.
A solar hybrid power option has been incorporated into the plant design, delivering savings in both operating costs and carbon emissions.
|
| Values based on a gold price of … | |
| Operating / unit costs (US$/oz of gold) | US$1,750/oz | US$1,650/oz |
| Mining | 418.8 | |
| Processing | 241.5 | |
| Maintenance | 22.8 | |
| General & administration | 83.8 | |
| Total cost to mine gate | 766.9 | |
| Transport, insurance & refining | 3.7 | |
| Total cash cost ('C1') | 770.6 | |
| Royalties & statutory | 73.8 | 69.6 |
| All-in sustaining cost ('AISC') | 996.5 | 992.3 |
Site layout
Optimised Study - Overview
Cora's Management undertook a review of various DFS work streams as they were nearing completion and in conjunction with peer reviews by independent consultants identified a number of optimisations to enhance the Project's economics. The optimisations were focused on capital expenditure savings with independent engineering firms providing lower pricing for both the TSF and project management (engineering, procurement and construction management ('EPCM')) contracts. Additionally, the Company has incorporated the benefit of pricing a second-hand smaller mill offering both capital and operating cost savings. The review of the TSF design and capex was carried out by Mario Boissé of independent consultancy MRP801. Mr Boissé has relevant recent experience in West Africa. The re-quote of the EPCM was provided by a well-established West African Company which also has significant relevant experience of constructing gold mines in West Africa.
The process flow sheet is undergoing further optimisation with the aim of improving the economics further. The optimisations being considered are around taking greater advantage of the oxide nature of the ore at the front end of the process flow sheet that could lead to opex savings. The Company will look to conclude this process before commencing the front-end engineering design ('FEED') prior to construction.
Future Potential
In addition to the Optimised Study, modelling has been carried out to add pit optimised inferred resources (using the same parameters as the Reserves and based on a gold price of US$1,650/oz) to the Maiden Reserves mine schedule. This illustrates the potential of converting inferred resources to reserves through additional drilling. The results of this modelling are set out below:
|
| Values based on a gold price of … | |
| Parameters | US$1,750/oz | US$1,650/oz |
| Life of Mine ('LOM') (years) | 9.3 | |
| LOM waste mined (kt) | 51,989 | |
| LOM ore mined (kt) | 13,751 | |
| Strip ratio (waste : ore) | 3.78 : 1 | |
| LOM grade processed (g/t Au) | 1.25 | |
| Average gold recovery | 90.8% | |
| LOM production (koz) | 501 | |
| Average production (koz pa) | 54 | |
| Average Free Cash Flow post tax (US$m pa) | 33.2 | 29.5 |
| LOM Free Cash Flow post tax (US$m) | 310 | 276 |
| Average cash cost (US$/oz Au) | 755 | |
| Average AISC (US$/oz Au) | 973 | 969 |
| IRR pre-tax | 63.7% | 55.0% |
| IRR post tax | 54.7% | 46.9% |
| NPV8 pre-tax (US$m) | 190.6 | 157.8 |
| NPV8 post tax (US$m) | 136.6 | 112.2 |
Furthermore, on 7 November 2022 the Company announced the results of an Exploration Target estimate ('Exploration Target') for the Company's wider Project. A total of 12 areas comprise the Exploration Target, with three areas responsible for over 50% of the Exploration Target, these being Target 3, Target 5 & 6 and Selin-Bokoro West Extension. The Exploration Target is estimated to contain between 26.0 Mt and 35.2 Mt with a grade range of 0.58 - 1.21 g/t Au for a potential content of 490koz - 1,370koz. This in addition to the Indicated and Inferred Mineral Resource of 24.9 Mt at 1.15 g/t Au for 920koz announced on 19 July 2022.
Investor Presentation
The Company has published an updated corporate presentation which can be found on Cora's website at: https://www.coragold.com/category/company-presentations/.
In addition, Cora Gold is pleased to announce that Bert Monro, Chief Executive Officer of Cora, will provide a live presentation relating to the Optimised Project Economics for Sanankoro via the Investor Meet Company platform on 28 November 2022 at 10:30am GMT.
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9am the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet Cora via:
https://www.investormeetcompany.com/cora-gold-limited/register-investor
Investors who already follow Cora on the Investor Meet Company platform will automatically be invited.
Market Abuse Regulation ('MAR') Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 ('MAR'), which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, until the release of this announcement.
* * ENDS * *
For further information, please visit http://www.coragold.com or contact:
| Bert Monro Craig Banfield | Cora Gold Limited | |
| Christopher Raggett Charlie Beeson | finnCap Ltd (Nomad & Joint Broker) | +44 (0)20 7220 0500 |
| Andy Thacker James Pope | Turner Pope Investments (Joint Broker) | +44 (0)20 3657 0050 |
| Susie Geliher Charlotte Page Isabelle Morris | St Brides Partners (Financial PR) |
Notes
Cora is a West African gold developer with three principal de-risked project areas within two known gold belts in Mali and Senegal covering c.1,000 sq km. Led by a team with a proven track record in making multi-million ounce gold discoveries that have been developed into operating mines, its primary focus is on developing the Sanankoro Gold Project in the Yanfolila Gold Belt, southern Mali.
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