Endeavour Mining says Ity 
may emerge as ‘flagship asset’

VANCOUVER — Endeavour Mining (TSX: EDV) is confident enough in its Ity gold mine in Côte d’Ivoire, West Africa, to start expansion next year. Recent exploration success, however, hints that the mine might have even greater upside.

On Nov. 10, the company released an updated feasibility study that offers a snapshot of a carbon-in-leach (CIL) operation that would crank out 114,000 oz. gold per year, but management pointed out the mine plan doesn’t take into account the recent Bakatouo and Colline Sud discoveries.

The study models a 3-million-tonne-per-year circuit with development costs of US$307 million, and includes eight indicated resource areas: Daapleu, Mont Ity, Ity Flat, Zia NE, Walter and Gbeitouo.

Ity’s global reserves total 41 million tonnes grading 1.42 grams gold per tonne for 1.88 million contained oz. gold. Daapleu is the largest deposit and hosts half of the reserves. It is also the only orebody with “significant sulphide mineralization,” while the other deposits contain mostly oxides.

The Ity gold operation is located around 480 km northwest of the city of Abidjan in southern Côte d’Ivoire. Credit: Endeavour Mining.

The CIL expansion would have a 14-year mine life and feature all-in sustaining costs of US$507 per oz. gold over its first five years of operation. All-in sustaining costs over the mine’s life are an estimated US$603 per oz. gold. The project would involve multiple open-pit mines — plus decommissioned heap-leach stockpiles — while construction could take 20 months.

Assuming a US$1,250 per oz. gold price, the study features a US$411-million after-tax net present value at a 5% discount rate, along with a 36% internal rate of return and 2.1-year payback.

“This project could become the longest-life mine in the portfolio, and over the first nine years of operation it would also become our lowest-cost operation,” president and CEO Sébastien de Montessus said during a conference call.

A view overlooking Endeavour Mining’s heap leach operation at its Ity gold mine in Cote d’Ivoire. Credit: Endeavour Mining.

“That’s just based on what we know today, and doesn’t consider the upside we might realize from ongoing exploration and optimization. In light of oxide discoveries, we’ll also look at running both the CIL and heap-leach components in the early years, which could boost initial gold production,” he added.

On Nov. 7, Endeavour released a maiden resource on its Bakatouo and Colline Sud discoveries, which sit 2.5 km from Ity’s current processing facilities. Oxide and fresh mineralization make up 42% of total indicated gold ounces, and could be “amenable to the heap-leach process.”

Bakatouo and Colline Sud host 5.4 million indicated tonnes grading 2.97 grams gold for 515,000 contained oz. gold, while inferred resources total 1.2 million tonnes of 2.73 grams gold for 108,000 contained oz. gold.

Meanwhile, the company completed a 26,855-metre auger drill program within 5 km of the current mine complex. The campaign identified “large and highly anomalous clusters” that have emerged as “high-priority” near-mine targets, including: the Bakatouo Northeast, Vavoua, Morgan/Yacetouo, Le Plaque and Daapleu Southwest areas.

“It’s the exploration upside that really shows the potential for the Ity complex to become another flagship asset,” de Montessus said.

“This is a great story because there are only a handful of companies that can advance grassroots discoveries to production, which is the best way to create value in our industry. The current feasibility document doesn’t include our near-mine discoveries, and we expect exploration success to continue, with the near-mine targets already identified,” he added.

Endeavour expects to start construction on the Ity expansion after the Côte d’Ivoire rainy season in September 2017. The mine plan may look different at that point, however, since yet another economic study is scheduled for release early next year. The company intends to incorporate 11,700 metres of drilling at the Bakatouo and Colline Sud deposits, as well as 33,000 metres of infill drilling at the Daapleu and Mont Ity deposits. Verse Ouest could also be in the mine plan.

Employees pour gold at the Ity operation in Cote d’Ivoire, West Africa. Credit: Endeavour Mining.

“The only thing we have outstanding right now in terms of the regulators is one more mining permit, so we’re almost ready to start,” executive-vice president of projects Jeremy Langford said. “This economic study was basically the last component we needed, and now that it’s complete I don’t foresee much else preventing us from moving ahead. The permitting process is regimented and the timelines are well established. We’re certainly confident we’ll have the permit by the time we make that construction decision next year.”

Endeavour expects to produce between 575,000 and 610,000 oz. gold this year — at all-in-sustaining-costs of between US$870 and US$920 per oz. gold — from its five gold mines in West Africa: Agbaou and Ity in Côte d’Ivoire, Tabakoto in Mali, Nzema in Ghana and Karma in Burkina Faso.

The company says it can fund the Ity expansion via free cash flows and current cash reserves. Endeavour shares have a 52-week trading range of $7.70 to $22.20 per share, and closed at $20.77 at press time.

The firm reported US$397 million in “available sources of financing and liquidity” at the end of October.

BMO Capital Market analyst Andrew Breichmanas observed that the CIL study results appear “largely in line,” and has an “outperform” rating on Endeavour, along with a $36-per-share price target. BMO Research notes that the company could increase its production in excess of 900,000 oz. annually with the “ramp-up of the Karma mine, completion of the Houndé project and addition of CIL processing at Ity.