JV Article: Boroo aims to be mid-tier producer within three years

For a relatively new company, Boroo Pte Ltd. has ambitions to become a mid-tier gold producer within the next three years, says chief executive officer Dulguun Erdenebaatar.

To achieve this goal, he said the company “is acquiring undervalued brownfield assets that have been placed on care and maintenance for various reasons and then extracting further value from them by extending their mine life.”

“Our approach is to take these operations to full production capacity as soon as possible, which allows us to generate good cash flow within a short time that we then re-invest back in the project. It also avoids significant infrastructure costs associated with developing greenfield projects from scratch.”

Headquartered in Singapore, Boroo is a privately-held company with a portfolio of producing and development-stage assets in Peru and Mongolia.

The company is focused on advancing its 100%-owned flagship Lagunas Norte gold mine in northern Peru, about 141 km east of the coastal city of Trujillo.

Boroo acquired the mine from Barrick Gold (TSX: ABX; NYSE: GOLD) in June 2021 for a commitment to pay Barrick US$81 million over a period of at least two years, as well as granting Barrick a 2% net smelter return (NSR) royalty. Between 2005 and 2019, Lagunas Norte produced over 10 million oz. of gold.

Within six months of acquiring the property, Boroo released an updated technical study for the mine.

The study estimated a 22-year mine life based on the existing mineral reserve estimate, with an average annual life-of-mine production of 147,000 oz. of gold and an after-tax net free cash flow of US$976 million.

All-in sustaining costs are expected to average US$885 per oz. of gold over the life of the mine. The after-tax net present value is estimated at US$450 million, based on a gold price of US$1,650 per oz. and using a 5% discount rate, with an after-tax internal rate of return of 25.3%.

Together with the engineering study, Boroo released an updated mineral reserve estimate for Lagunas Norte. The project now contains 49.4 million proven and probable tonnes grading 2.49 grams gold per tonne and 6.24 grams silver per tonne for 3.95 million oz. contained gold and 9.92 million oz. silver.

The updated estimate confirmed that an additional four million oz. contained gold could be processed over the life of the mine, noted Dulguun. “In addition to the increased reserve estimate, the expansion is also a de-risked approach to re-starting the project and scaling it up to full production capacity.”

He added that production from the existing heap leach operation at the site has already been re-started at a rate of 60,000 oz. of gold per year.

The company also released an updated feasibility study for the treatment of historically stockpiled carbonaceous material at the site. Dulguunsaid that the Carbonaceous Material Optimisation Project (CMOP) will involve the processing of about 15 million tonnes of ore with an average grade of 2.4 grams gold per tonne from historically stockpiled gold-bearing oxide materials.

He said the updated study included a more comprehensive sampling program of the previously mined material, with test work on the material confirming previous estimates for precious metals recovery and the economic benefits of the CMOP.

“The study also improved on the economics of the project as we were able to purchase and repurpose processing equipment from another site, leading to a significant reduction in capital costs for the project.”

The project costs now stand at US$143 million, a reduction of about US$111 million from the initial estimate, with an internal rate of return of 67% and a payback period under two years.

To date, Boroo has completed construction and operational permitting for the CMOP and is now undertaking early earthworks on the site, which it plans to complete this quarter. It has finished basic engineering and has completed 60% of the detailed engineering work, with construction slated to start in March this year.  

The company anticipates the project will increase production to 160,000 to 170,000 oz. of gold per year and expects construction to be completed by the fourth quarter of 2022, with the first gold pour scheduled for this December.

“There are also 12 exploration concessions within a 20 km radius of the mine that we inherited from Barrick, which we plan to start exploring this year to identify one million gold ounces of measured resources within three years,” said Dulguun.

He added that Boroo is looking to acquire additional assets in Peru and North America and is mulling over a possible listing on the Toronto Stock Exchange. However, he said the company “first needs to demonstrate tangible results for potential future investors before we decide to go public.”

The company’s assets in Mongolia include the Boroo gold mine and processing facility, about 110 km northwest of the capital Ulaanbaatar, and the Ulaanbulag gold mine, about 21 km to the southeast of the Boroo mine.

The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by BOROO PTE. LTD. and produced in cooperation with The Northern Miner. Visit www.boroomc.com.sg for more information.