Golden Star Resources Ltd has filed a National Instrument 43-101 (NI 43-101) technical report which includes a mineral reserve and resource update and a preliminary economic assessment (PEA) of the potential expansion of the Southern Extension zone in the Wassa underground gold mine in Ghana.
The PEA provides an assessment of the development of the Southern Extension of Wassa and the increase in mining rates to fully utilise the available process plant capacity. The PEA represents a conservative plan which excludes exploration opportunities from the scope and adopts the current mining practices and equipment to deliver a robust economic outcome while minimising execution risk. Opportunities to improve productivity and reduce the environmental impact of the operation through the application of technology will be evaluated in the next phase of work.
Mineral reserve and resource update highlights
- Achieved 86% increase in measured mineral resource and 98% increase in proven mineral reserve at Wassa Underground demonstrates the improving geological confidence that has been delivered by recent infill drilling programmes.
- Wassa expected to deliver increased value with cut-off grades optimised for the higher mining rates achieved in 2020 and the resulting unit cost reductions. The opencast resource has been remodelled as an underground resource which enables accelerated access, reduced upfront capital demand and removal of low-margin ounces from the plan.
- Measured and indicated mineral resource at Wassa Underground has increased by 1 million oz after the addition of material formerly reported as opencast and the cut-off grade reduction from 1.89 g/t to 1.4 g/t.
- Total proven and probable mineral reserve has decreased by 321 000 oz after depletion and the conversion of the previous opencast mineral reserve. The optimised underground mineral reserve has increased by 21% to 1.1 million oz of gold.
- The mineral reserve plan outlines a 6-year mine life with annual production averaging 177 000 oz of gold at an all-in sustaining cost (AISC) of US$881/oz (excluding corporate costs), for a post-tax net present value (NPV) of approximately US$336 million.
- Life of mine (LOM) of 11-years from the inferred mineral resource in the Southern Extension zone, with total gold production of 3.5 million oz. Average annual gold production of 294 000 oz, representing an approximate 75% increase on the current production rate.
- Average cash operating costs per ounce of US$551 over the LOM, average AISC (excluding corporate costs) of US$778/oz over the LOM. The cost estimate is based on actual activity costs from 2020 with adjustments as the mining depth increases.
- The PEA outlines a development pathway to increase the underground mining rate to fully utilise the plant's processing capacity with low upfront capital demand through access and haulage via twin declines.
- Robust economics with after-tax NPV5% of approximately US$783 million and an internal rate of return (IRR) of 53% at consensus gold price per ounce (US$1585/oz long term).
- The growth project is expected to be funded by its cash flow and available liquidity; the flexibility of the development strategy means that the investment phase can be slowed or accelerated subject to the gold price.
- Opportunities to add value to the PEA outcomes include: design optimisation (level spacing, stope size); haulage systems (infrastructure, electrification); resource extension (from drilling); and emissions reduction (renewables, power and water efficiency).
- Given the strength of the prevailing gold price, the investment in drilling, development and trade-off studies will be progressed in 2021, as already outlined in the company's guidance for the year.
Andrew Wray, CEO of Golden Star, commented: "In 2020, we focused on improving our geological confidence in the orebody through an extensive infill drilling program which has resulted in a significant increase in our measured resource and proven reserve. Converting the opencast reserve at Wassa to an underground reserve allows us to bring production from those areas forward with a lower upfront capital cost. Development of the Upper Mine will start to deliver production from 2023 and will provide a second decline access to the mine which can be incorporated into the long term mine design.
“The PEA demonstrates the significant value and growth potential of Wassa, clearly laying out the path to underground mining rates in excess of 7000 tpd and production of approximately 300 000 oz/y when in steady state production. Following this study and with a stronger balance sheet, we are in a position to further accelerate the investment in drilling, development and exploration programs to deliver on the growth potential and value of Wassa.
“With moderate conversion factors and cost estimates based on actual performance, the PEA demonstrates the potential for an after-tax NPV of US$783 million at the long-term consensus gold price of US$1585/oz, this being incremental to the reserve mine plan, and represents a meaningful addition to the value of Wassa.
“In parallel we will be expanding our exploration efforts to add to the already impressive resource growth at Wassa, with the orebody open in almost every direction, follow up near mine opencast targets and standalone exploration targets along the 90 km Wassa trend. Exploration success could further supplement the already exciting growth opportunity."
Read the article online at: https://www.globalminingreview.com/exploration-development/04032021/golden-star-resources-files-wassa-gold-mine-technical-report/