Site visit: Amara showcases its Yaoure gold deposit in Cote d’Ivoire

YAMOUSSOUKRO, CÔTE D’IVOIRE — Past the hazy black smoke in the West African commercial city of Abidjan, Côte d’Ivoire, is a lush green jungle that inexplicably covers an ancient craton teeming with gold.

It’s only until one reaches the country’s hydroelectric power plant and Kossou dam, 40 km northwest of the capital Yamoussoukro, where the earth is exposed as a dark basaltic rock that was once a volcanic island chain 2.5 billion years ago. 

But what’s more impressive are the many brilliant white quartz veins that crosscut the outcrop — a signal to any passing geologist that they’re nearing Amara Mining’s (LSE: AMA) Yaoure gold project, which is just around the corner.

“We’re a junior that has the largest undeveloped gold deposit in West Africa,” John McGloin, chairman and CEO of Amara, tells The Northern Miner, while our van passes the dam and bounces along the last 5 km of a potholed road that leads to the former mine. “It’s an asset that normally sits in a mid-tier, or a major company.”

Yaoure is a vein-hosted gold deposit with a maiden “reserve” of 2.7 million oz. gold from 70.4 million tonnes at 1.18 grams gold, assuming US$975 per oz. gold. 

Total inferred and indicated resources, including reserves, is 6.8 million oz. gold from 169.3 million tonnes at 1.25 grams gold, assuming US$1,500 per oz. gold. 

Over half of the reserve is contained within an east-dipping, north-trending zone of high-grade mineralization called the CMA, whereas 42% is found within the less continuous, lower-grade Yaoure Central orebody in the west.

The remaining 200,000 oz. gold is within the oxide material that blankets the deposit to a 40-metre depth.

Inside the air-conditioned office at site, Amara’s team presents the prefeasibility study (PFS) results for what they envision will become the country’s fifth operating gold mine.

The new economics are tabulated on two scenarios — using a mining inventory restricted to measured and indicated resources; and the “MII,” which includes an upgrade from 6,000 metres of drilling that’s underway south of the Yaoure Central zone.

McGloin says the MII scenario best represents the project’s outcome, and he’s “confident” that the upgrade will be successful. The company expects to update  the resource estimate late this year as it progresses towards a bankable feasibility study (BFS), expected first half 2016.

The MII envisions a 6.5-million-tonne-per-year open-pit operation producing 247,000 oz. gold per year over a 10-year mine life. Estimated capital expenditures total US$447 million and projected all-in sustaining costs would be amongst the lowest in Africa, ringing in at US$648 per oz. gold.

In comparison to the preliminary economic assessment (PEA) released last year, head grades were down 16% from 1.53 grams gold to 1.29 grams gold, along with production down 11% from 279,000 oz. gold to 247,000 oz. gold per year.

But the slight negatives are offset by encouraging positives.  The new PFS saw a 14% reduction in mining costs to US$2.08 per tonne, as Amara incorporated on-grid electric shovels in its mine plans to use lower hydropower costs of US8¢/kwH.

The strip ratio has fallen from 4.9 to 3.3, with previously undrilled “waste” areas converted to “ore” after the current drill program. 

The final numbers of the study fall closer in line with the original PEA, showing a US$513-million after-tax net present value at an 8% discount rate, and a 33% internal rate of return (IRR) at US$1,250 per oz. gold — but Amara says it can improve these numbers.

“What we put out in the PFS is really the low tidemark for the project,” McGloin says. “We want to get below a capital cost of US$350 million, and one of the ways we’re doing that is by reducing our pre-strip with more infill drilling.”

Pinned along the wall in the meeting room are cross sections that step through the geology and block model of the deposit. McGloin points to “blue zones” that denote low-grade mineralization, particularly one that extends 300 metres beneath the Yaoure Central pit.

“There’s quite a bit of data we haven’t used that demonstrates areas of higher-grade mineralization and greater continuity at depth,” he says. “The blue is deceiving, and we’re confident there’s more gold to be found that’s not represented in our current block model.”

The company is planning to drill these additional zones once it has  dewatered the pit and drilled for the current resource upgrade.

McGloin says it could also increase the project’s IRR by selectively mining the high-grade CMA zone as a staged development play, and process the material within a smaller plant.  

“The CMA zone is highly diluted in the current block model, because we took a more simplistic, bulk-mining approach for the PFS,” he says, adding that CMA has average grades of 3.26 grams gold, compared to the 1.3 grams gold for the Yaoure Central.

The project may also generate higher cash margins during initial start-up by reprocessing the heap-leach pads that Amara estimates as having 50,000 to 80,000 oz. gold. 

After venturing outside in the muggy heat, the group is escorted to the core yard, where intercepts from the CMA and Yaoure Central ore zones are laid out across the metal racks.

A geology map of West Africa hangs on the wall, displaying packages of volcano-sedimentary rocks wedged into granitic intrusives denoted together as a northeast-trending pattern of pinks and greens. 

The image is a snapshot of an important compressive event that happened 2.1 billion years ago, when volcanoes and the adjacent sedimentary ocean basins were deformed, uplifted and sutured onto the West African craton.

As the crust thickened, granitic intrusives were emplaced while large-scale brittle and ductile fault zones developed. Gold-rich fluids later migrated through the structures, leaving behind the prolific West African deposits in its wake.       

The gold endowment was substantial, and neighbouring countries such as Ghana are among the world’s top-10 gold producers, generating 3.2 million oz. gold in 2013.

But McGloin points out that mineralization is constrained by geology, and not by political borders. Côte d’Ivoire has over 35% of the prospective terrain, yet its discoveries only account for 8% of West Africa’s gold reserves — and he says those numbers are the reverse for Ghana.

“Very little exploration has been done in the country, because the government used to focus on an agricultural-based economy,” he says. “But there’s been a big change in the political and social climate over the past decade, and now the government sees the mining industry as a key component to its future. It changed its mining codes last year just to make it more competitive with Burkina Faso, so it’s a great time to be doing work here. It’s a stable country with an emerging market.”

While standing over the drill core intercepts, it’s apparent that Yaoure is unique from the other prolific deposits in West Africa — the ore is dominated more by brittle fracturing than plastic shearing, and hosted mostly in volcanics.

The CMA is a 20-metre thick, continuous zone of high-grade mineralization wi
thin a strong shear zone that dips 30 degrees east.

One-hundred forty metres vertically below is the parallel-trending Yaoure Central body, which is a lower-grade, 200-metre thick zone hosted mostly in fractured granodiorites and narrow, less continuous shear zones.

Cross-cutting the orebodies are high-grade gold veins running oblique to the main mineralizing trends.

“From the start we focused on isolating these oblique veins in our models to prevent smearing out their bonanza grades in the wrong direction,” he adds. “So when we start mining, any error in the resource model will be to the upside.” 

Seeking refuge from the hot African sun, the group returns to the main office building, where water bottles are being handed out. 

In between sips, McGloin mentions that Amara is fully funded to continue towards its BFS, where it will incorporate the new infill results and any modifications to the mine plans.

It landed a US$22-million placement in January, and is discussing a US$10-million investment with International Finance Corp.

“Côte d’Ivoire is not like Burkina Faso or Mali — we’re really spoiled here,” he says. “There’s plenty of water, cheap power and a sophistication of the people that really helps make this a standout project in West Africa.” 

Amara shares have traded within a 52-week window of 12.98p to 26.5p, and closed at 14.5p at press time. The company has 420.2-million shares outstanding for a £59.8-million market capitalization.