New LoM plan for Edikan improves operating cost profile, reduces capex

PERTH (miningweekly.com) – Dual-listed gold miner Perseus Mining’s latest life-of-mine (LoM) plan for its Edikan operation, in Ghana, has reduced production over the remaining seven-and-a-half-year mine life, as the miner deferred the development of the Esuajah South openpit operation.

A 2015 LoM plan had envisioned that the Edikan mine would deliver 240 000 oz/y of gold between 2016 and 2023, at an average all-in cost of $937/oz.

However, an updated LoM released on Tuesday estimated that gold production would average 222 000 oz/y over the Edikan mine’s remaining life, including production of around 258 000 oz/y for the next five years.

A decrease of 10% in the all-in average site costs was also expected in the next five years, to $920/oz, while all-in sustaining costs would average $865/oz over the LoM plan.

“Our updated LoM plan for Edikan forecasts an improved operating cost profile for the remaining years of Edikan’s mine life and a reduction in required capital expenditure, representing a major strengthening in the outlook of the Perseus group,” said MD and CEO Jeff Quartermaine.

With the deferral of the Esuajah South openpit, Perseus was expecting a $31-million decrease in sustaining capital, with $44-million now required, compared with the $75-million estimated in the previous LoM plan.

The net present value of Edikan’s forecast cash flow had increased to $287-million, from $278-million, based on a gold price of $1 200/oz.

“The reshaped forecast cash flow profile from Edikan materially enhances our capacity to finance our project pipeline, which will be developed as part of the company’s corporate strategy of transforming from a single mine, single country company to a multi-mine, geopolitically diverse midtier gold producer,” Quartermaine said.

He added that having just completed the acquisition of Amara Mining, and with the Yaoure gold project and the Baomahun gold project, Perseus had upgraded the quality of its asset portfolio and was positioned for material growth in production, cash flow and earnings in the short to medium term.

“The updated LoM plan for Edikan underpins this compelling growth story which now relies on our ability to successfully execute all phases of our plan. This is the key focus of Perseus’s management team and we are looking forward to delivering strong returns for our shareholders.”