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Cardinal Resources’ feasibility study confirms Namdini as tier-one gold project

The study has “delivered a compelling and robust technical and economic outcome, paving the way for our planned development,” said MD Archie Koimtsidis.

Cardinal Resources Ltd - Cardinal Resources’ feasibility study confirms Namdini as tier-one gold project
First gold pour is targeted for H2 2022, subject to financing in H1 2020

Cardinal Resources Ltd’s (ASX:CDV) has demonstrated attractive economic returns for the Namdini Gold Project in Ghana through a feasibility study, which also confirms that it is a tier-one asset.

At a US$1,350 per ounce gold price, pre-tax NPV at a 5% discount is US$914 million and internal rate of return is 43% while post-tax NPV is US$590 million and IRR is 33.2%.

The study has increased project reserves to 5.1 million ounces, up from the 4.76 million ounces outlined in the pre-feasibility study (PFS).

“Compelling and robust”

Managing director and CEO Archie Koimtsidis said: “Cardinal’s technical team, led by chief operating officer Dave Anthony, along with Lycopodium, Golders and various study managers, have delivered a compelling and robust technical and economic outcome, paving the way for our planned development of the Namdini Gold Project. 

“With over 1 million ounces slated for production in the first three years, 421,000 ounces in Year 1 alone, and average annual gold production of 287,000 ounces over a 15-year mine life, Namdini ranks amongst the world’s largest known, financially robust, undeveloped gold projects.

“Namdini has a 5.1-million-ounce ore reserve that is projected to generate US$1.46 billion in undiscounted, pre-tax free cashflow over 15 years including US$324 million in undiscounted, pre-tax free cashflow during its first year of full production based on a gold price of US$1,350, which is significantly below the current spot gold price.”

Study outcomes

The 15-year cashflow increases to US$2.05 billion at US$1,500 per ounce while the first year cashflow increases to US$384 million at the higher gold price.

Other study outcomes:

  • US$348 million capital expenditure plus US$42 million contingency allowed with a robust level of accuracy of +15/-5% (PFS US$414 million total capex; +30/-20% accuracy); 
  • Capex payback of 21 months at US$1,350/ounce (12 months at US$1,500/ounce); driven by early higher grades and recoveries, low strip ratio and low costs, within the starter pit;
  • Low all-in sustaining costs (AISC) of US$585 during capex payback (PFS US$599);
  • Pit design LOM strip ratio 1.9:1 (PFS 1.4:1); starter pit strip ratio of 0.9:1; LOM pit design based on US$1,235/ounce (PFS US$1,105/ounce);
  • Financial model based on US$1,350/ounce for 15 years (PFS US$1,250/ounce); and
  • 4.2 million ounces (130 tonnes) produced over 15 years (PFS 3.9 million ounces); AISC US$895/ounce (PFS US$769).

The study is based on the adoption of Aachen Process Technology to provide economic benefits via operating cost savings.

This achieves 85% gold recovery during the first three years and 83% recovery for the current LOM plan.

The 9.5 million tonnes per annum project is based upon a single, large open pit with a conventional process plant design; crush, grind, float, regrind, high shear oxidation (AachenTM) and carbon in leach (CIL).

De-risking work

Koimtsidis said, “Since the discovery of Namdini in 2015, we have continued to be focused on de-risking the project and have reached a robust project capex accuracy level of +15/-5% for this feasibility study.

“Unlike whole of ore gold processing plants, we have the benefit of being able to produce a concentrate for gold extraction on site which means that we have a much smaller back half of the plant providing a huge positive impact on capital costs.

“Economic and technical optimisation confirms a large, single open pit utilising a conventional process plant with a throughput of 9.5 million tonnes per annum and a very attractive 24-month debt payback.”

In conjunction with moving the project toward a financial investment decision, work continues on further project optimisation and regional exploration utilising Cardinal’s strong cash at bank of approximately A$27 million.

Ongoing evaluation

Potential remains for further improvements in project economics which will form the basis of ongoing evaluation work, including:

  • FEED and PEP programs incorporating Whittle Consulting’s mine and schedule optimisation plan; 
  • OPEX savings by evaluating a flotation cleaner circuit; potential to reduce required regrind power;
  • Additional resources that are not part of the current ore reserve which represent lateral strike and depth extensions to the current LOM pit design at US$1,235/ounce. Subject to the outcome of additional drilling beyond the current pit design, any economic discovery not in the current mine plan may extend the life of the current mine plan which may also include a new underground mine plan; and
  • The regional land package may also have potential to define satellite pits with close proximity to Namdini.

Recent results from drilling at Ndongo project, around 24 kilometres north of Namdini are within hauling distance.

Drill testing new zones of high-grade gold mineralisation to define satellite pits will recommence soon.

The company’s Board has approved this feasibility study and recommends progressing the project to construction pending successful completion of financing activities.

The MD added, “On a social level, Namdini is poised to become the first large-scale operating mine in the Upper East Region of Ghana, delivering sustainable prosperity and opportunities to all stakeholders.

"We are grateful for the continued overwhelming support of these communities and their elders along with the Government of Ghana to bring this project into production.”

Financing options

Cardinal has been working with its appointed debt advisor, Cutfield Freeman & Co (London), to secure project debt finance on competitive terms and continues to assess various funding options. 

In addition to traditional financing solutions, the company is concurrently evaluating strategic alternatives to bring the project into production with a view to maximising economic outcomes for shareholders. 

A final financing decision will be made at a time assessed as most appropriate and beneficial to the company.

Quick facts: Cardinal Resources Ltd

Price: 1.06 AUD

ASX:CDV
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Market Cap: $557.59 m
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Full interview: Cardinal Resources delivers Namdini gold feasibility study...

Cardinal Resources Ltd (ASX:CDV) chief executive officer and managing director Archie Koimtsidis updates Proactive on delivering a pleasing feasibility study for the Namdini Gold Project in Ghana, West Africa which confirms it as a tier-one gold project. The CEO said the FS demonstrates a...

on 13/11/19

5 min read