JOHANNESBURG (miningweekly.com) – South African banks are being engaged for the raising of $113-million to fund Liberia’s first commercial gold mine.
Financing for construction is expected to be completed by October and civil construction is expected to begin in the fourth quarter of this year, Aureus Mining CEO David Reading tells Mining Weekly Online.
Aureus’ New Liberty project has good grade and short payback, which is why banks are reportedly showing interest.
“Our focus is to fund the mine build with debt and other instruments,” says Reading, who codiscovered Randgold Resources’ company-making Morila gold mine in Mali in the Nineties with Randgold Resources' high-flier Dr Mark Bristow.
Bond financing is also being assessed with quarry of crushers companieskey financing objectives including minimal hedging and debt funding for most of the project.
The study of the Aim- and TSX-listed company shows cash costs of $632/oz with the openpit expected to produce 123 000 oz a year for the first four years.
First gold production from New Liberty, which is situated 100 km north of the Liberian capital of Monrovia, is expected to begin in the fourth quarter of 2013.
Africa’s first female president Ellen Johnson Sirleaf, who is doing her second term of office in Liberia, small grinder machineis reportedly keen to see New Liberty unfold as the country’s first commercial gold mine.
“She’s turned Liberia into a post-conflict success story,” Reading comments to Mining Weekly Online.
Adrian Reynolds, also known in South Africa for his role in the successful Randgold Resources’ executive team in Mali, is a nonexecutive director of Aureus.
After listing in April last year, the fledgling company raised C$40.4-million from a public equity offering last May to fund exploration progravertical raw mill specificationmmes at New Liberty, which has a reported pre-tax net present value of $260-million and an expected internal rate of return of 62% at an average gold price of $1 350/oz.
The company still has $31-million in cash, no debt and is fully funded for the conducting of the project’s definitive feasibility study (DFS) and exploration for the next 18 months.
Drilling indicates a 1.6-million-ounce openpit reserve in an orebody that is still open to the west and at beyond-200 m depth.
Its total resource grade of 3.6 g/t is higher than that of many of its peers.
The final DFS is expected to be released in early May.
“The beauty of our project is its proximity to Monrovia,” Reading, the former European Goldfields CEO whose early experience was with Anglo American, tells Mining Weekly Online.
Logistics can be eased by mining contractors shipping their equipment from Takoradi in Ghana and driving to site from Monrovia in less than one day on tarred roads.
While there is no grid electricity, there is an opportunity for cheap run-of-river-type hydroelectric power.
Corporate tax is 25% and 3% royalty and the government has a 10% free carry after capital expenditure recovery.
Aureus has a huge mining licence covering 457 km2 and a contiguous exploration licence of 90 km2.
In addition to New Liberty – “which I call the starter kit” – Aureus is undertaking near-mine exploration at Leopard Rock, Ndablama, Gondoja and Weaju to increase the resource base.
Ten near-mine targets are being drilled in the area around New Liberty, with promising results at Leopard Rock.
It has over one million measured and indicated (M&I) gold ounces at a grade of 3.62 g/t and an updated M&I is in the offing because it has another 42 holes to add to the previous 369 holes.
Carbon-in-leach test work is under way to achieve a gold recovery of more than 93% from a plant with a capacity of 1.1-million tons a year.
Mano River Resources originally held the assets in 2003 when Liberia was still a conflicted no-go area.
But $16-billion in foreign direct investment is now flowing into the mineral, oil and agricultural sectors in Liberia, where port and electricity grid redevelopment are under way in Monrovia.
African Petroleum is drilling offshore for hydrocarbons, Arcelor Mittal has gone into iron-ore production, Malaysian conglomerate Sime Darby is managing palm oil rubber plantations, BHP Billiton has signed an iron-ore agreement, Adamas/Endeavour is working on gold opportunities and Newmont has applied for a gold licence.
“It’s a very busy place at the moment,” Reading tells Mining Weekly Online.