Talas Gold Mining Complex in Kyrgyzstan launched
The Jerooy deposit located in Talas Region in northwestern Kyrgyzstan has estimated reserves of nearly 90 tonnes of gold and about 25 tonnes of silver.
Russia’s President Vladimir Putin and President of the Kyrgyz Republic Sadyr Japarov took part, via videoconference, in a ceremony to launch the Talas Gold Mining Complex at the Jerooy deposit.
The project, which is being implemented by Russia’s Alliance Group with support from VTB Bank, is among the largest in the history of Russian-Kyrgyzstani economic cooperation in terms of investment volume. The potential level of production at the enterprise is five tonnes of gold a year.
The ceremony to launch the Talas Gold Mining Complex was also attended by President of Alliance Group and President and Chairman of the Board of Directors of Russian Platinum Musa Bazhayev, and President and Chairman of VTB Bank Management Board Andrei Kostin.
“The launch of the Talas Gold Mining Complex at the Jerooy deposit is indeed an important project for Russian-Kyrgyzstani economic cooperation and, in general, for the strengthening of partner and allied relations between our nations,” Putin said, who added that “The Talas Gold Mining Complex will employ cutting-edge technology and state-of-the-art equipment, including those compliant with all nature conservation regulations and standards. This will allow the production of up to five tonnes of gold per year, efficiently and with no environmental damage.”
According to Putin, the mining complex is creating more than a thousand jobs offering new employment opportunities to the local population. Small and medium-sized enterprises in Talas Region will be able to secure lucrative deals to supply goods and services required by the complex.
“Russian investors intend to provide significant financial support for the social development of Talas Region. The company director already said that a designated foundation was established that will receive up to $2 million every year. Almost half of these funds will be spent on socially significant projects in the region while the rest of the money will be used for subsidised lending to businesses,” Putin said.
Chaarat Gold gets positive feedback from newly formed Kyrgyz government
Chaarat Gold is a gold mining company which owns the Kapan operating mine in Armenia as well as Tulkubash and Kyzyltash gold projects in the Kyrgyz Republic.
Chaarat Gold Holdings said that it has received positive feedback on the progress of Chaarat’s projects and appreciation for the investments and community support to date during last weeks’ meetings with the new president of Kyrgyzstan, Sadyr Japarov, and the new prime minister, Ulukbek Maripov.
Martin Andersson, Executive Chairman of the Board, commented: “I am pleased with the positive feedback received during the meetings in country and it was a great honour to meet the new leaders of the Kyrgyz Republic in person. The meetings confirmed that Chaarat as an investor and our projects in the Chatkal valley are seen as a major step forward for the communities and are important to the country.”
In further meetings, a memorandum of partnership and cooperation with foreign investors was signed between Chaarat Gold Holdings and the Investment Promotion and Protection Agency aimed at attracting investments, as well as developing a number of projects in the regions. The company added that the agreement includes the existing plans of Chaarat to invest more than 110 million US dollars on the construction of the Tulkubash mining and processing project including related infrastructure investments in the Chatkal district of the Jalal-Abad region over the next two years. Based on the current plans, this will help create more than 800 new jobs at the site.
AzerGold runs geophysical and geological explorations of iron ore deposit in Armenia
Armenian Dashkasan iron ore deposit is the only iron ore deposit has proven reserves of 270 million tons. The iron content of the ore varies mainly between 35-45 per cent by deposits.
Azerbaijan’s gold mining company AzerGold CJSC has started geophysical and geological exploration in the country’s Dashkesan iron ore deposit with a proven reserve of 270 million tons, a source within the company has reported.
At the first stage of the geological exploration program, 32 geological wells will be drilled in four areas to confirm resources for the field’s reserves. As part of the initial studies, drilling work is expected to be carried out with a total depth of 21,000 meters, 6,500 of which are scheduled for completion this year. Moreover, the information obtained as a result of drilling operations will make it possible to form a database on primary resources. After analysis and study of this information it will be possible to draw up the following geological exploration programs aimed at specification, increase and full confirmation of the field resources.
Likewise, all researches will be carried out by a team of experienced professionals in accordance with modern approaches and requirements of international standards. Based on the results of geological exploration works, geological models of the field will be drawn up, existing resources and reserves will be recalculated in accordance with JORC international standards, economically viable resources will be re-evaluated.
The studies carried out to prepare the preliminary evaluation document are the necessary step in the implementation of mining projects. Thus, positive indicators from results, at this stage of exploration, will allow moving to the next stage of a more detailed study of the deposit. It should be noted that, exploration work is scheduled to be completed in the first half of 2021, and the preliminary evaluation report will be completed and submitted to the state in the second half of the same year.
Exploration is done within the framework of works on preparation of the document on preliminary evaluation of the deposit, in accordance with the decree of Azerbaijani President from August 6 on measures to put into operation the Dashkasan iron ore deposit.
The company has developed a program of geological exploration works for this purpose. At present, the existing information is being collected and digitized, work is being done to prepare a three-dimensional geological model of the deposit using special software. Earlier it was reported that, Azerbaijani President Ilham Aliyev has signed an order to put into operation the Dashkasan iron ore deposit. Under the order, initially $1.76 million (AZN 3 million) will be allocated to AzerGold mining company from the amount specified in the relevant paragraph of the “Distribution of funds for state capital investment (investment expenditures) in the state budget for 2020.
Uzbekistan, the gold helps country’s financial support
Gold is an important commodity that the government uses to decrease the current account deficit, and as global trade slows, with increasing competition for a shrinking global economic pie, Uzbekistan has a guaranteed way to make sure its current account deficit, expected to move into surplus in the mid-2020s on the back of rising exports and a decrease in machinery imports, does not get out of hand; if it so wished it could sell enough gold today to move the country into a trade surplus. This puts Uzbekistan in a very unique and favorable position, providing strong support to the country’s finances for what will be a long road ahead on the way back to normality in the global economy.
As many Asian central banks grasp the value of gold and continue to increase their holdings, western central banks have largely done the opposite and have sold large chunks of theirs in recent years. While gold is regarded by some economists and business people as an archaic relic, Uzbekistan is an important case study for why gold is so valuable for emerging economies.
The first half of 2020, like in many countries, was a challenge for Uzbekistan in relation to exports, which fell 7% y/y. Meanwhile, imports rose 3.6% due to the continued re-industrialization of the country and strong demand for animal protein. When excluding the country’s $2.12bn in gold sales, the current account deficit stood at $6.52bn. Accounting for the gold sold during the period, the current account deficit narrowed by 32.6% to $4.4bn. At the end of this year’s first half, Uzbekistan’s foreign exchange reserves stood at $32.32bn, of which $19.60bn was gold, equivalent to 11mn ounces (the Central Bank of Uzbekistan continually replenishes its gold reserves through purchases of physical gold in local currency from state-owned mines). As of July 31, these 11 mln ounces of gold were valued at $21.73bn or 41.77% of GDP.
As part of its initiative to boost its status as a major global gold producer, the government is making an aggressive push to increase gold exploration and production. With 63 gold districts and proven & probable reserves at 8,500 tonnes, investing in Uzbekistan doubles as a synthetic play on gold. Annual gold production is roughly 100 tonnes and the government has plans by the mid 2020s to increase combined gold and silver production to 270 tonnes. This will largely be contributed by increased production from the country’s largest mining companies—Navoi Mining and Metallurgical Combine (NMMC) and Almalyk Mining and Metallurgical Complex (Almalyk MMC), the former of which is being restructured for an expected international IPO in the coming few years.
Private investors are, however, also playing in the sector, mainly on the exploration side of things. Dual-listed B2Gold has already been awarded exploration licences where it is investing in early stage exploration and several other private outfits from Canada, the UK, Russia and other countries are all looking to get increasingly involved, especially once current mining legislation is further streamlined, making it easier to apply for exploration licences across the country.
With global gold production expected to fall during FY 2020 relative to historic 1-2% annual growth and amid an environment of rising demand, Uzbekistan is well positioned to benefit from the bullish gold backdrop amid the uncertain global economic outlook.
Armenian gold mine continuous issue and government indecision
Renewed conflicts over a controversial gold mine in Armenia have once again highlighted the government’s indecision and so the project remains in limbo, a year after an environmental assessment was supposed to determine the future of this project.
On August 4, clashes between activists, local residents, police, and mining company officials broke out at the entrance of the mine, near the eastern Armenian city of Jermuk. Officials from the company operating the mine, Lydian Armenia (the local subsidiary of a British mining firm), attempted to remove some cabins that had been set up by activists who have been protesting there since 2018, and to replace them with new cabins for company guards. The activists complained that the guards, from a recently hired security company, had been behaving inappropriately. “They are armed, provoking people, swearing at them,” activist Themnine Yenokyan told the local service of RFE/RL. The protesters are demanding that the government cancel the project, which they say will badly damage the surrounding ecology and the water supply.
The mine contract, which was signed by the previous government, ousted by Prime Minister Nikol Pashinyan in 2018, has been one of the most sensitive issues that the new government has had to face. It has pitted grassroots activists, of the type that were instrumental in bringing Pashinyan to power, against proponents of the project – including Western embassies and investors – who insist that it will provide the kind of jobs that he has promised.
In an effort to resolve the deadlock, Armenia’s Investigative Committee ordered an environmental impact assessment, which was released a year ago and which Pashinyan took as a green light to let the development of the mine proceed. The impact to groundwater resources would be as small as “washing a car on the beach,” he said last August.
But just two weeks later, his government reversed course following a spirited public debate, and said it would study the issue further. Since then the issue has languished, one that to many Armenians has exemplified the government’s inability to make difficult decisions. Lydian, meanwhile, has threatened to sue if the government cancels the project. At Amulsar, eventually police removed the Lydian-installed cabins, representing a victory for the protesters. The demonstrations then moved to Yerevan. On August 10, several activists picketed parliament with signs like “Amulsar is a mountain, our struggle is just.” Police soon broke up the protests.
“They started to inflict violence on me and others without any warning or demand,” one of the activists, Arman Gharibyan, posted on Facebook (in English). “I was screaming that their actions are illegal that they don’t have the right to arrest me. Nobody was listening. Later in the police unit they were not giving me even a glass of water telling that there is no water in the unit and nearby shops.”
The government has remained silent over the recent developments.
Human rights activist Nina Karapetyants told journalists covering the protest in front of parliament that, “If this was before the revolution, 40-50 percent of, members of the current National Assembly would be by our side. Today, they value their positions and bonuses much higher than the words and rights of their friends, their voters and the people.” She said the silence of the authorities suggested that they were waiting “to see whoever wins and then stand by them.”
Russian gold output increased
Gold production in Russia increased in the first five months of the year, up 2.8% on the same five months of last year. Russia produced 104.31 mt of gold over January-May, according to information on the website of the Russian finance ministry. Russian gold output increased year on year as the price of the yellow metal rose continuously and mining ramped up, offsetting a decline in volumes generated through recycling.
Primary gold production, including ancillary mined tonnage, grew 4.83 mt or 5.5% year on year to 93.17 mt. Of this, 6.8 mt was produced as a by-product in other metal ores. Overall, mined metal comprised 89% of the country’s total gold production in the first five months of 2020.
The amount of gold produced from scrap totaled 11.14 mt, down 15% year on year.
In terms of profits, Russia’s export sales of gold in the second quarter exceeded those from natural gas for the first time in the country’s history (counting from 1991). In April-June, gas exports fetched $3.5 billion, less than the $3.58 billion revenue from gold exports in April and May alone (66.4 mt), according to media group RBC, citing data from Russia’s customs service and central bank.
Proceeds from export gold sales over April-May jumped 14-fold year on year from $247 million in April-May 2019.
Armenian gold mine Amulsar – EBRD investment finished
Lydian International’s Amulsar gold mining project in southern Armenia has been under blockade for the past two years, by local people and environmental activists. They blocked access to the mine in the wake of the country’s 2018 ‘Velvet Revolution’. Now European Bank for Reconstruction and Development investment in a controversial $400m gold mine in Armenia is to end, a new assessment by the bank’s complaint body states.
News that the EBRD’s investment is due to end comes as protests have been renewed at the Amulsar site in recent weeks, after the Lydian group hired a new private security firm and removed a trailer belonging to activists.
The London-based development bank has funded exploration, drilling and feasibility studies and environmental and social mitigation measures by Lydian since 2009, and has been targeted with criticism by civil society groups over its support for the company.
“The EBRD owes the public a proper statement expressing its position on the project and current developments,” said Fidanka McGrath, EBRD policy officer at CEE Bankwatch Network. “The recent despicable provocation by Lydian’s security company [at Amulsar] is only a sign of the reputational damage that this investment will continue to inflict on the EBRD, even after its shareholdings in Lydian International are wound up.”
The Amulsar blockade has led to a complex standoff between Armenia’s government, headed by former protest leader Nikol Pashinyan, Anglo-Canadian mining company Lydian International and protest participants themselves. The standoff has also drawn in the mine’s international backers, including the EBRD, as well as the UK and US governments.
The ongoing blockade and a government-ordered environmental audit have prevented Lydian, Armenia’s largest foreign investor, from completing work at the mine, as well as causing it financial difficulties. An assessment report by the EBRD’s Independent Project Assessment Mechanism (IPAM), published on 7 August, states that the bank’s investment will be “terminated” as part of Lydian’s corporate restructuring process.
After Lydian’s lenders revoked their agreement to suspend the company’s interest and principal payments, which had been initiated as a result of the Amulsar blockade, the group is now owned by its three senior lenders, resource investment firms Orion Resource Partners, Osisko Mining and Resource Capital Funds. Lydian’s existing parent company in Jersey, in which EBRD held a 5% shareholding, is being liquidated as part of this restructuring. The IPAM report states that EBRD “has no financial interest” in restructured Lydian’s new parent company, which is incorporated in Canada, and the completion of the Jersey proceedings “will result in the termination of EBRD’s shareholding”.
Writing on Facebook, Lydian Armenia stated that “EBRD and other shareholders ceased to be part of the Amulsar programme exclusively as a result of domestic illegality in Armenia”, and that the company would continue to observe the development bank’s environmental standards.
“The EBRD can still redeem itself by speaking up in support of democracy and by working with the Armenian government to remedy the environmental harm and social conflicts caused by the project,” said Fidanka McGrath. “Either way the bank will have to answer for its failure to ensure proper consultations with affected communities.”
Disagreements over the potential environmental and social harm of the Amulsar mine, which is 75% complete, have animated much of the public tension over the flagship mining project. Campaigners have cited concerns over the mine’s potential impact on environmental damage, local tourism and social change, and a petition signed by 26,000 people has called on the mine’s financial backers, including the EBRD, to divest. In 2017, the International Finance Corporation, the World Bank’s development arm, withdrew its funding from Lydian International, stating that its investment was no longer necessary.
Lydian calls the mine blockade illegal, and has accused the Armenian government of “inaction” over the situation. In March 2019, Lydian notified Armenia of a potential international arbitration dispute under British and Canadian bilateral investment treaties over what it calls an “ongoing campaign by the Armenian Government targeting Lydian’s investments in Armenia”. Lydian, originally based in Jersey, states it has followed the highest international standards on environmental mitigation and protection for the proposed mine – as required by EBRD, which has been invested in the company since 2009.
“There is no environmental issue here, it has grown into a political issue,” Lydian Armenia director Hayk Aloyan said in a recent interview. “The entire world follows the situation in Armenia, where the most environmentally-sound mining investment project has become hostage to political games.”
The unfinished mine was set to employ 750 people once it came online, Lydian states, with another 3,000 jobs created by local companies linked to the mining operation. Company projections put the number of its tax and royalty contributions to the Armenian state budget at €432 million through the ten-year operation of the mine.
The EBRD IPAM report comes in response to a complaint by residents of the local tourist town of Jermuk, as well as five non-governmental organisations in May this year. They claim that Lydian had “failed to ensure that the project complies with the requirements of the bank’s Environmental and Social Policy”, and that they had “already experienced serious environmental harm from the project, resulting from pollution of water, air and land”.
The EBRD stated in response to the complaint that “environmental and social due diligence on the Project was undertaken and that the issues presented in the Request had been adequately addressed by the Company”. The report did not state Lydian’s position on the specifics of the complaint, but that the company “had indicated their willingness… to move discussions with stakeholders forward and with the intent of resolving issues”.
In its summation, IPAM stated that “Problem Solving would offer limited potential for a constructive dialogue… due to the lack of trust between the Parties”, and that the “Parties share irreconcilable differences in their own principles”.
Euro Sun’s big gold mining project in Rovina Valley, Romania
Without doubt, one of the best jurisdictions to build a mine is the European Union. Not only do countries in the trading bloc boast advanced infrastructure and pro-mining laws, but also the E.U. framework establishes cross-border political stability and heavily promotes foreign direct investment.
Euro Sun Mining is primed and ready to develop Europe’s second largest gold resource – the 10 million ounce Rovina Valley Gold Project, and this exciting opportunity could be about to make investors a great deal of money.
The location of a major gold mining project is critical. A company can be sitting on the biggest metal resource in the world, but it doesn’t mean a thing if local law and civil unrest prevent its development. There’s a reason why high-quality projects are so rare in the world’s most attractive mining jurisdictions – most of them have already been taken. Institutional investors flock to back deposits of mineralization in safe regions, which promote natural resources development, because they know this gives them the best chance of developing a mine. This maximizes their chances of seeing a giant-sized return on investment.
Rovina Valley project
Euro Sun is the 100% owner of the Rovina Valley project in west-central Romania.
From a geological perspective, Romania is hugely prospective. The area where Rovina Valley sits is known as the “Golden Quadrilateral”. It is one of Europe’s largest gold-producing regions, with more than 55 million ounces having been pulled out of the ground since since Roman times.
Despite this, Romania hasn’t made much of a meaningful impact on the global mining investment world because state-owned businesses have dominated the development of its vast resources. Now this is changing.
Since joining the European Union in 2007, Romania’s compliance with the trading bloc’s rules and obligations has fostered a culture of improved governance principals at the state level. Over the years, this has created a friendly and incentive-based economic environment that has encouraged more and more international business. Soaring levels of foreign direct investment continue to propel Romania forward, and the country is currently on track to deliver the second-highest EU country GDP growth in 2020 and 2021. Against this backdrop, the floodgates for foreign investment into the country’s highly attractive mining industry have opened. And the catalyst was none other than Euro Sun Mining. In 2018, this company became the first-ever non-state-owned business to win a mining license from the Romanian government.
Euro Sun was able to succeed where others had failed, by approaching the development of Rovina Valley with a deeply-held commitment to sustainable Environmental, Societal, and Governmental principles:
-No cyanide will be used at Rovina Valley, and dry stack tailings will be used rather than wet tailings to reduce visual impact and water usage.
-The company will re-use existing infrastructure left over by the nearby, historic Barza mine, use renewable power sources, and confirm the absence of archaeological remains.
-Local communities will be engaged throughout Rovina Valley’s development and production to provide hundreds of jobs and remain the need for community resettlement.
Euro Sun has the green light to do everything from exploration to development, production, and commercialization at Rovina Valley.
Looking further forward, the support of the Romanian government opens the doors wide for the firm when it comes to future mining opportunities in Europe’s newest mining investment destination. It’s no surprise that institutional investors are falling over themselves to get exposure to Euro Sun. As recently as May 2020, the company upsized a bought deal public offering from C$12 million to C$20 million in response to extreme demand – it eventually raised C$22.3 million. As a result of this, Euro Sun now counts leading UK fund manager Ruffer as its leading shareholder with a 9% position. With the likes of Franklin Templeton and ASA Gold and Precious Metals also taking large stakes in the raise, close to a third of the company’s share capital now sits in institutional hands.
But it’s not just the firm’s location and permitting progress that has got these individuals excited; it’s also Rovina Valley’s quality.
The project hosts 10.11 million ounces of gold in the highly prized Measured and Indicated resources categories spread across three pits – Colnic, Rovina, and Ciresata. This makes it Europe’s second-largest gold deposit. Meanwhile, Euro Sun has also taken great steps to demonstrate the economic viability of its project. A preliminary economic assessment in 2019 gave the Colnic pit alone a pre-tax net present value of US$228.1 million and an internal rate of return of 15.4% at US$1,325/oz gold. At today’s >US$1,900/oz spot price, this NPV5 increases to more than US$700 million – and that’s not even factoring in the value of the Rovina deposit, which will be developed sequentially.
The Lassonde Curve
One indicator in particular suggests Euro Sun’s share price is about to go on a run much higher – the Lassonde Curve. The Lassonde Curve uses historical data to map out the typical valuation journey that mining projects take throughout their lifecycle – from early stage exploration to full mine development. According to the Lassonde Curve, the recent institutional investment in Euro Sun puts it on track for a massive re-rate as more heavyweight investors buy in throughout Rovina Valley’s construction and production.With Euro Sun on track to complete the remaining feasibility and development needed to become “shovel ready” by next year, its current C$0.47 share price and C$78.6 million market cap present an exciting opportunity.
And as if this was not enough, the company is entering this period at a time when gold stocks of every description are being propelled forward by the highest prices for the precious yellow metal ever seen. Year-to-date, the Euro Sun share price is up by nearly 70%. But with its rooting in a pro-mining European jurisdiction, ground-breaking state support, vast gold resource, and impressive institutional backing, this stock looks set to fly much higher.
Dark Horse’s explorations and acquisitions in Finland and Sweden
Australian resource company Dark Horse Resources Ltd is exploring for large gold deposits. Dark Horse announced in June to have entered a partially binding term sheet with Sotkamo Silver AB to acquire Tampere Gold Project in Finland and Bergslagen Tungsten Project in Sweden. The transaction is planned to be completed against an upfront payment of €150,000 and transaction documentation expenses in the European countries.
The company has released an update on the acquisition of Finland gold and Sweden tungsten exploration tenements and the ongoing share purchase plan for existing shareholders.
Dark Horse’s Finnish and Swedish Exploration Permits
The Tampere Gold Project includes 7 highly prospective gold exploration permits in the Tampere region of Finland, Hopeavuori (2 permits), Isovesi, Järvenpää, Kalliojärvi, Lavajärvi and Metsäkylä. These permits are in close proximity, covering a total area of 286Ha. Moreover, the project lies within 100km of Tampere that currently hosts 3 gold mines- Orivesi, Jokisivu and Kaapelinkulma, and a processing facility at Vammala- all operated by Dragon Mining Limited.
The Bergslagen Tungsten Project holds 7 exploration permits in the fecund Bergslagen mining district of Sweden, covering a total area of 11,012Ha. The project consists of Yxsjöberg, Gubbo, Hörken, Högfors, Sandudden and Gänsen Prospects. On 7 July 2020, Dark Horse Resources updated to have established two separate wholly owned subsidiaries to hold the Finnish gold permits and Swedish tungsten permits, respectively. The Company has already appointed a Company Administrator to manage its corporate affairs in Finland. Additionally, accountants, auditors and legal counsel have been appointed. The Permit Purchase Agreement (PPA) between Dark Horse and Sotkamo Silver AB has advanced and is expected to close within the very near future. The agreement also includes a 45-day exclusivity term between the two parties. Upon completion of the agreement, the permits will be transferred from Sotkamo to Dark Horse’s wholly owned subsidiaries. The process for such permit transfers in Sweden and Finland is anticipated to take 1 to 2 months.
Tampere Gears Up for Upcoming Drilling Program
An extensive re-evaluation of the geological and exploration data is underway by Dark Horse’s exploration team, which is also finalising the design of a drilling program at the Finland Tampere Gold project. Dark Horse plans to give special attention to the Hopeavuori prospect, which exhibited high-grade assay results from historic drilling programs. A total of 54 diamond drilling holes amounting to 3,341 metres at Hopeavuori have been drilled with maximum depth of 75 to 100 metres.
Here are the assay results from some of the drilling sections
R305: 11.5 metres Intercept with gold grades of 19.4 grams per tonne, 30.6 metres downhole
R313: 10.7 metres intercept with gold grades of 14.4 grams per tonne, 4 metres downhole
R330: 3 metres intercept with gold grades of 7 grams per tonne, 22 metres downhole
The assay results confirmed the presence of high-grade, shallow mineralisation in the mining friendly jurisdiction. Dark Horse believes that the historical results may not be entirely compliant to the JORC 2012 code due to which the historical information may or may not be included in the future exploration or evaluation results and the estimation of JORC 2012 code compliant mineral reserves and resources.
Share Purchase Plan Closing on 15 July 2020
Dark Horse reiterated that the explorer has successfully raised $675,000 through the recently concluded placement and is currently raising more funds through the Share Purchase Plan (SPP), which is scheduled to close on 15 July 2020.
Proceeds from the capital raising would be utilised for the Hopeavuori drilling program, which is anticipated to commence following the permit transfer and settlement of acquisition in September/October 2020. All eligible shareholders may buy shares up to a value of $30,000 to raise another $750,000 (before costs). Dark Horse may accept oversubscriptions of up to another $250,000, further increasing the fund raising to $1 million value.
DHR closed at $0.002 a share on 8 July 2020, with a market capitalisation of $5.89 million.
Erdene’s Bayan Khundii Gold Project, BFS results
Bayan Khundii Gold Project (BK) in southwest Mongolia is high-grade, opencast project 100% owned by Erdene Resource Development Corp. Erdene announced the results of an independent Bankable Feasibility Study (BFS).
The independent Bankable Feasibility Study was prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and has incorporated detailed mine design and scheduling, front-end engineering design for the processing plant and site infrastructure, a hydrogeological assessment, mineral waste facility design, comprehensive capital and operating cost estimation and an updated economic model. These studies have been completed by a consortium of international and Mongolian firms with significant experience operating in Mongolia and internationally. The technical report, prepared by the Roma Group Ltd, pursuant to NI 43-101 guidelines, will be filed on SEDAR within 45 days.
“The Bayan Khundii BFS results confirm the high-return nature of this project in its base case, with significant potential upside due to ongoing district-wide exploration and exposure to rising gold prices. The shallow, high grade, opencast Bayan Khundii deposit lends itself to conventional mining and processing techniques, reducing the execution risk in bringing the project into production in an accelerated timeframe,” said Peter Akerley, President and CEO. “As a low-CAPEX, low-OPEX project with a less than 2-year payback and significant growth potential, Bayan Khundii offers investors and stakeholders exposure and leverage to gold as we move towards first production in early 2022.”
“Recent exploration results, including intersections of high-grade gold in the Midfield SE and Striker SW zones of the Bayan Khundii deposit, currently classified as sub-grade material, are expected to add to the Project’s robust economics,” continued Akerley. “The Bayan Khundii development is the foundation for growth in our underexplored Khundii Gold District and we see significant potential to expand resources, extending the mine life and creating value for all stakeholders. We will follow up on recent exploration success with additional drilling in 3Q20.”
“We have recently engaged HCF International Advisers Ltd (HCF) to secure debt financing for the project,” concluded Akerley. “Their expertise, combined with the support of the European Bank for Reconstruction and Development (EBRD) position us well to secure the funding to commence construction later this year.”
The BK BFS is based on an opencast mining operation targeting 600 000 tpy of feed material for the processing plant. The total mineable mineralised plant feed is 3.4 million t at an average diluted head grade of 3.7 g/t gold and average strip ratio of 9.1:1 (waste tonne: plant feed tonne). Mineralisation starts at surface, with the majority of the deposit contained within the top 100 m. The deposit structure, grades and depth suggest selective open cut mining will be utilised. Mining will use hydraulic excavators in backhoe configuration. Drilled and blasted material will be loaded into haul trucks, with waste rock deposited in an engineered Integrated Waste Facility (IWF) adjacent to the mine, and ore hauled to a crusher or run-of-mine (ROM) pad adjacent to the processing plant.
The BK BFS has assumed contract mining based on methodology and costing contained in proposals received from contractors with suitable experience in Mongolia in similar open-pit mining environments. In this scenario the contractor provides the full fleet and personnel to operate the project on a schedule of rates (US$/t material moved) basis. The contractor is proposing a total of 4 x excavators (2 x ore, 2 x waste), 10 x 55 t payload trucks, 3 x blasthole drills and a fleet of ancillary and support equipment to deliver the required material movement. The contractor’s workforce peaks at approximately 190 personnel to deliver the required schedule of production.
The ore-processing plant will be located adjacent to the Bayan Khundii opencast mine and throughput will target 600 000 tpy of ore, nominally 1800 tpd. Total mineralised material from BK, processed in the plant over the course of the mine life, is 3.4 million t at an average diluted head grade of 3.7 g/t gold. Using an estimated mill recovery of 93.1%, total recovered gold over the life of the Bayan Khundii deposit is 381 700 oz.
Operating costs are based on the mining and processing scenarios outlined above and assumes contract mining. Power for operations will be generated through a hybrid diesel and solar generation solution, provided under a power purchase agreement for the duration of the Project. All other activities are assumed to be owner-operated. The AISC for Bayan Khundii is estimated at US$733/oz.
Opportunities to enhance project value
The company sees the following opportunities to enhance value at the Khundii Gold Project:
-Additional resources at Bayan Khundii
-The Bayan Khundii Resource includes measured and indicated resources of 521 000 oz at an average grade of 3.16 g/t gold,and Inferred Resources of 103 000 oz of gold at a grade of 3.68 g/t gold which could potentially be added to opencast reserves through both additional drilling and rising gold prices
-Recent drilling at the Midfield SE and Striker SW zones of the project area intersected exceptionally high-grade gold, including 1 m of 582 g/t gold within an intersection of 5.5 m grading 126 g/t at Midfield SE, in areas of the resource currently classified as waste or sub-grade material. The areas are expected to provide additional high-grade feed in the early phases of development
-Additionally, very high gold grades observed in drilling in the Striker West portion of the deposit have the potential to provide additional high-grade resources should closer spaced drilling improve continuity
-The reported resource is pit constrained based on multiple parameters including a US$1350 gold price. Multiple high-grade intersections outside the mine provide expansion targets requiring additional drilling in a rising gold price environment
-Further drilling is planned for 3Q20 to confirm the existence of high-grade material within the Bayan Khundii project area
The Bayan Khundii deposit is situated in a highly prospective region that has received minimal historical exploration. On the Bayan Khundii property, multiple high-grade targets have been established through limited shallow drilling and surface sampling within 4 km of the deposit, including the Khar Mori (Dark Horse) prospect identified in late 2019.
Erdene recently trenched new gold zones at Dark Horse, with assays returning 6 m grading 8.8 g/t gold, including 1 m of 50.8 g/t gold, and 4 m of 14 g/t gold, including 1 m of 45.3 g/t gold. As a large untested prospect, Dark Horse provides significant discovery potential along strike with a well-defined and continuous gold-in-soil anomaly along a NE trending structure for 1.3 km. In addition, there are several isolated but intense gold-in-soil anomalies at or near NE-NW structural intersections. Drilling is planned for 3Q20.
Although a 93% gold recovery has been utilised for the BFS, testing of a recent master composite sample, representative of the BK ore, with a head grade of 3.6 g/t gold, returned recoveries averaging 95% indicating an opportunity for increased recoveries in the plant.
Higher grade upside
The very high-grade nature of the Bayan Khundii deposit provides upside should continuity of the ultra high-grade zones (greater than 20 g/t gold) be established during mining.
Khundii Gold District
Erdene’s deposits are located in the Edren Terrane, within the Central Asian Orogenic Belt, host to some of the world’s largest gold and copper-gold deposits. The company has been a leader in exploration in southwest Mongolia over the past decade and is responsible for the discovery of the Khundii Gold District comprised of multiple high-grade gold and gold/base metal prospects, two of which are being considered for development: the 100%-owned Bayan Khundii and Altan Nar projects. Together, these deposits comprise the Khundii Gold Project.
The Bayan Khundii Gold Resource includes 521 000 oz of 3.16 g/t gold Measured and Indicated (M&I) and 103 000 oz of Inferred resources at 3.68 g/t gold. Within the M&I resource, a proven and probable opencast reserve totals 409 000 oz at 3.7 g/t, providing possible significant growth of reserves with the potential development of the remaining M&I and Inferred resources.