EDV, OGC, ODV, WGX, TUO
West African gold miner Endeavour Mining aka EDV has released a PFBS for the Assafou-Dibibango (“Assafou”) project on the Tanda-Iguela property in Côte d’Ivoire. They like the results enough that they are proceeding to an FBS while declaring that Assafou has the potential to become a 'Tier 1 asset'.
The numbers do look decent. I would like the IRR to be a little higher than 28% at a $2000 gold price, but no doubt this number will increase during the FBS. The initial capex of $734M is certainly manageable for a company the size of EDV, and the expected production of 329k oz Au per year for the first ten years at an AISC of $892.oz Au is definitely Tier 1. There is also plenty of exploration upside to come.
I am looking forward to the results of the DFS, which are expected to be released around the end of next year, with first gold production expected in 2028. To remind you, Assafou was only discovered in late 2021, so to have already defined almost 5M oz Au is darn impressive.
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FWIW, in the wake of the PFBS on Assafou, BMO issued a new analyst report on EDV calling the im[pact Positive, with particular emphasis on the exploration upside at a number of satellite deposits, some of which will be incorporated into the FBS. They kept EDV at Setor Perform with a target of $40.
FWIW, BMO also issued a new analyst report on EDV, likewise calling the impact Positive. They were impressed by the PFBS, but concentrated more on EDV being able to reach an inflection point in 2025 in terms of FCF, allowing them to pay down debt, pay for building Assafou out of cash flow, plus increase capital returns to shareholders.
OceanaGold aka OGC released the PFBS for the proposed Wharekirauponga (WKP) underground mine on its Waihi property on the north island of New Zealand. The Martha mine at Waihi is scheduled to continue producing until 2033, at which point WKP will begin operations along with an upgrade to the existing mill.
The numbers look pretty good for an FBS.The initial Mining Reserve encompasses 4.1 Mt at 9.2 g/t for 1.2M oz Au, but that will be upgraded as there are also around 400k oz Inferred, and the ore body, which remains open in multiple directions, is continually being expanded by ongoing drilling.
The IRR at $2400 gold is an acceptable 24%, and will increase through the FBS, with WKP projected to produce 1.6M oz Au over 15 years at an AISC of $994/oz, dropping to $634/oz once Martha is exhausted. The capex of $566M is expected to be funded entirely from cash flow.
Thanks to the new permitting rules in New Zealand, OGC expects to be fully permitted to begin construction before the end of 2025. Note that portal and facilities construction is already underway. Meanwhile, both exploration and conversion drilling are ongoing.
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FWIW, in response Scotia issued a new analyst report on OGC calling the impact Mixed. In general they like the project, but were disappointed that costs came in higher and the Ore Reserve grade came in lower than they expected. Still, they kept OGC at Sector Outperform with a target of $6, citing the potential to improve those negatives.
FWIW, BMO also issued a new analyst report on OGC. They were more sanguine about the numbers, and maintained OGC at Outperform with a target of $5.75.
Last month Osisko Development aka ODV announced they had received the Mining Act permit necessary to begin construction of the Cariboo underground mine in central BC. Now they have received the other main permit under the Environmental Management Act, leaving only a minor permit needed to construct the transmission line to grid power.
Currently ODV is extracting a bulk sample and doing some underground work at Catiboo, with both expected to be completed Q1, with an optimized feasibility study expected in Q2. They are also working to finalize the financing package, and expect to make a construction decision in late 2025, with first production expected before the end of 2027.
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West Australian gold miner Westgold Resources aka WGX announced they have signed a deal to process ore from NMG.AX's Crown Price mine, ore that will be processed at WGX's Bluebird South mill on their Meekatharra property. In essence this is an offtake agreement, with 30-50kt of ore per month being trucked the 35 km from mine to mill once Crown Prince begins production in mid-2025.
Note that since WGX owns 18.7% of NMG's shares, finalizing the deal will require the approval of both sets of shareholders.Note also that the ore is soft oxide which should be relatively cheap and easy to process, and should provide a good source of income for WGX while the agreement lasts
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We've had news from Teuton Resources aka TUO's JV partner on the Treaty Creek project in BC's Golden. Tudor Gold and Seabridge Gold have been in dispute over one area of land vital to both company's pans to develop their nearby projects. Now TUD has hired a high-priced firm of lawyers experienced in this area of jurisdiction to put forward their claims.
Personally, I wish someone would end the dispute by buying out both Seabridge and the JV partners' interests in Treaty Creek and combining the development of both into one large project.
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Saville points out that this week the PoG made all time highs in the Euro and $A, more evidence that the gold bull remains intact even as the correction in $US terms is ongoing (including counter trend rallies). |
