At the start of April 2021, gold exploration and development firm Tietto Minerals published a highly anticipated pre-feasibility study (PFS) for its flagship Abujar Gold Project in Côte d’Ivoire, to the delight of its legion investors who have been following Tietto’s progress since its listing on the ASX in January 2018. “I think the general market is always quite cautious when your PFS results come out, but our shareholders were extremely happy with the outcomes of the PFS, particularly with the robust economics,” Tietto’s managing director Caigen Wang tells RGN. The study revealed a 3.5 million tonnes per annum (Mtpa) open pit operation, producing 200,000 ounces of gold in the first year and an average 168,000 ounces over the first six years of the project, based on a maiden probable reserve of 15.7 Mt at 1.7 g/t gold for 860,000 ounces within the life of mine inventory of 1.1Moz in the base case scenario. The economics, which were perceived so favourably by Tietto’s investors, included a post-tax NPV (5%) of US$266 million and an IRR of 42%, based on an average gold price of $1,506 per ounce – significantly lower than the current spot of around $1,900 per ounce. The PFS resembled one of the most significant pieces of news flow released by the company since it first applied for an exploration licence at Abujar back in 2014. The milestone study also begins a ~two-year countdown to first commercial production at what will be West Africa’s next major gold mine.
A key outcome of the PFS was its ability to demonstrate a simple, low-cost mining operation at all-in sustaining costs (AISC) of $839 per ounce. Crucially, for the first six years of the current 10-year mine life, Abujar will be mined via open pit – with 100% of the total ore reserve amenable to open pit mining in the base case scenario.
The open pit scenario is one contributing factor to the low AISC at Abujar; another is the high gold recovery levels on the ore processing side. Laboratory results have shown recovery rates of 96-98% via a simple carbon in-leaching (CIL) method at a course grind particle size of 180µm to 106µm.
“Our gold is very easy to recover. The test results show it’s easy to crush and grind the ore and average energy requirements of fresh ore are lower than the vast majority of gold projects operating in West Africa. That shows that the processing side is not only simple, it’s also cheap,” Wang asserts.
World-class gold jurisdiction
The low-cost nature of the project ultimately stems from its location in the Ivorian segment of the Birimian greenstone belt snaking across West Africa, where gold operations regularly fall into the lowest global AISC quartile.
Côte d’Ivoire encompasses the largest section of the Birimian (covering 34% of the total mineralised belt) and produced 32.6 tonnes of gold from five mines in 2019, with the latest addition being Perseus Mining’s 3.8 million ounce (Moz) Yaouré Gold Mine in central Côte d’Ivoire, which was commissioned at the end of 2020 and is similarly sized to the Abujar project.
Aside from the strong geological potential available to Tietto and fellow exploration miners, the country offers favourable fiscal terms and strong government support, alongside a network of infrastructure that is unrivalled in the region.
In terms of energy, a significant chunk of Côte d’Ivoire’s grid power is supplied by environmentally- friendly hydroelectricity, which is not only cheap but a stable source of power for the nation’s industrial operations.
“Every existing modern mining operation in-country operates on grid power. In our location in central-West Côte d’Ivoire, electricity costs for domestic use are 12 cents US per unit. That’s actually very cheap compared with other mines operating in West Africa, where they often use expensive and polluting diesel-based generators to provide energy.”
Wang is also quick to point out that Côte d’Ivoire is a nation of bitumen roads, including in the Abujar region. The project is well served by bitumen roads which run through the middle of Tietto’s 1,114 km2 exploration licence and along of the edge of its 120.36 km2 mining licence. The only infrastructural development required is the upgrade of an 18 km site access road, which has already commenced and a 90kV connector to Daloa.
Lowering the capex
The PFS estimates that a $230 million capex will be required to build the mine – a conservative figure that includes $35 million in pre-production mining and contingency which may not be necessarily used in the Abujar mine construction, according to Tietto’s managing director.
“The work in our PFS on the processing plant side has been done very much to definitive feasibility study (DFS) level and Mintrex has actually been working towards the DFS from the beginning, so the contingency numbers are going to be reduced when we reach the definitive stage very soon.”
In addition, the recent procurement of a 4 Mtpa SAG mill will further reduce the capex bill through optimisation of the production profile at Abujar. The mill is slightly larger than the capacity used in the PFS, which means Tietto won’t have to do as much pre-production mining.
“Now we will be able to maintain a bigger gold production profile,” Wang says. “The SAG mill is going to save $3.5 million in capex alone compared to the PFS estimate. These [aforementioned] things are likely to deliver a sizeable reduction in the total capex requirement as well.”
Delivering the DFS
The Abujar DFS is scheduled for Q3 of 2021 and will contain upgraded figures on the current 3.02 Moz resource which came out in October last year, based on more than 53,000 metres of mostly infill (and some extensional) drilling across the existing resource on the middle tenement at the project.
The infill drilling has focused on adding confidence in the inferred resources that were identified in a scoping study for an expanded project at Abujar. The expansion plan has the potential to deliver increases in NPV, IRR and mine life, with gold production growing to 1.4 Moz of gold recovered over 12 years of operation in the expanded scenario.
“Our expectation is that all resources currently in the inferred category, including the expanded case, will be drilled and upgraded to the indicated category, which means we have an opportunity to add this part of the resource to the reserve. Following the DFS, we’re expecting to have a reserve of around 1.4 Moz if not more,” says a confident Wang.
After publication of the DFS, Tietto plans to complete a debt facility, mobilise contractors and begin major construction works in the final quarter of the year. While this timeline puts the company soaring towards first gold and commercial production in Q4 2022, the story doesn’t end there at Abujar.
As Tietto always reminds its investors, the current Abujar resource comes from a very small portion of the overall 70 km mineralised strike length, with less than 10% of the project tenements explored and multiple mineralised structures existing in parallel to the strike of the current resources.
“Most of these targets are yet to be drill tested. That gives us big potential to increase our resource base and with our own drilling capacity of six sets of diamond drill rigs; we are able to drill around 11,000 metres of diamond holes per month.
“This puts us in a very strong position to continue expanding our resource base while we focus on the mine development at the same time. With new resources to be defined, there is clear upside beyond the initial mine life of around 10 years.”
Personnel for the transition
As alluded to by Wang, Tietto is now preparing itself to work on two fronts at Abujar: Building and operating the gold mine, as well as continuous drilling to expand the resource base. The transition from being 100% exploration-focused to a gold producing company is evidenced by recent additions to the executive team, such as COO Matt Wilcox in February 2021.
Tietto’s new COO brings huge experience in building modern gold mines, with the latest being the 2.6 Mtpa Sanbrado mine for West African Resources in Burkina Faso, which was delivered under-budget and under-schedule. Gradually, more members of Wilcox’s team will be joining Tietto, including his earthmover manager, mine construction manager, commercial manager and health and safety manager.
“I believe that people are the most critical asset of any company. On that note, I would like to flag our appreciation of the in-country team, led by our country manager Fred Yao Nkanza and our geological team, led by Yaya Ouattara and Rock Seouvo. They are so capable and reliable people working at extreme efficiencies. We are really proud of them and thank them very much,” Wang concludes.