Just a month and a half behind schedule and three weeks after the World Health Organization (WHO) marked the end of the Ebola outbreak in Liberia, Aureus Mining (TSX: AUE; LSE: AUE) celebrated the first gold pour at its New Liberty open-pit mine in the West African nation.
“It was a big challenge,” the company’s president and CEO David Reading says of building and commissioning the mine during the Ebola crisis, which killed 4,806 people in the country, according to the WHO. “We were caught between a rock and a hard place. We were two-thirds of the way through, and if we’d stopped, we probably would have bankrupted the company. But if we had an infection, I’d never be able to forgive myself.”
Fortunately, there was not a single case of the deadly disease at the project, and Reading chalks that up to strict procedures and health protocols. “We quarantined the site in terms of barriers, in terms of temperature checks, in terms of hand washing, in terms of having upgraded facilities, doctors on-site and having private charters to get us in and out of Liberia,” he says. “You name it, we did it.”
Reading expects the mine will achieve steady production during this year’s third quarter, and revels in the fact that New Liberty is Liberia’s first commercial gold mine, “and probably the first new mine built in West Africa for over two years.”
He also expresses pride about the team (“a lot of good people who have built gold mines in West Africa, some of whom previously worked for Randgold, Nevsun and in South Africa”). “We put an experienced team together, and the fact that we were able to get through the Ebola crisis unscathed is a testatment to that.”
The company also achieved milestones in a negative equity gold market, Reading says.
“Since we formed this company in 2011, gold has been going one way, and it’s not up,” he says in a telephone interview from his office in London. “Our share price, unfortunately, has done the same. But now we’re starting to outperform gold in the index, and we’ve done that, despite the economic climate for gold prices and gold equities … if you can build in a negative cycle, it puts you in a strong position for the next up-cycle.”
This year, Reading says, will be about “bedding down operations, getting to steady state in the third quarter at 95,000 tonnes a month, and then really generating some revenue. Next year the plan is to invest some of those profits in drilling, as well as having a full year of production.”
New Liberty is part of Aureus Mining’s 100%-owned Bea Mountain mining licence, where the company has already done initial resource estimates on two satellite deposits: Ndablama and Weaju. The licence covers 478 sq. km and has a 25-year renewable mineral development agreement.
Ndablama — an in-house discovery, 35 km northeast of New Liberty — has an indicated resource of 7.6 million tonnes grading 1.58 grams gold per tonne for 386,000 contained oz. gold, and inferred resources of 9.6 million tonnes grading 1.70 grams gold for 515,000 contained oz. gold.
The Weaju deposit, 10 km from Ndablama, has an inferred resource of 2.7 million tonnes averaging 2.1 grams gold for 178,000 oz.
The company has $100 million of debt on its balance sheet at an overall 5% interest rate, Reading says, which “is pretty exceptional … you won’t get that today.”
As for working in the West African country, management has had “nothing but support from the government and people of Liberia,” Reading says, and management is acquiring more ground around its existing projects in the country. “Watch that space,” he comments. “I think we have a lot of organic growth.”
Aureus was fortunate, Reading adds, that New Liberty is just 100 km from the port and road accessible, which helped the company get all of its equipment to site, despite the Ebola crisis.
The New Liberty mine is expected to have an eight-year mine life and annual production of 119,000 oz. gold for the first six years of production.
At press time Aureus shares traded for 59¢ apiece, within a 52-week price range of 25¢ to 80¢. The junior miner has 366.7 million shares outstanding, giving it a $212.7-million market capitalization.
I was the first person to blast in the mine. It was difficult to get explosives for the hard Rock, yet we were able to blast. Liberia is a nice country.