Endeavour to launch expansion of Sabodala-Massawa as study confirms its potential to become top-tier gold mine

Endeavour to launch expansion of Sabodala-Massawa as study confirms its potential to become top-tier gold mine

The expansion project is expected to yield an incremental production of 1.35 million ounces of gold at a low AISC of $576 per ounce

Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) has told investors it will soon launch the construction of its Sabodala-Massawa expansion project in Senegal, supported by a recently completed definitive feasibility study (DFS).

The West African gold producer said the DFS recommends the expansion of the Sabodala-Massawa complex by supplementing the current 4.2 million tonnes per annum (Mtpa) carbon-in-leach (CIL) plant with a 1.2 Mtpa BIOX plant to process the high-grade refractory ores from the Massawa Central Zone and Massawa North Zone deposits, with first gold production expected in early 2024.

“We are extremely pleased with both the current performance of Sabodala-Massawa and the definitive feasibility study results announced today, as they demonstrate the asset’s potential to be a top tier mine capable of producing in excess of 400,000 ounces per year at an industry-leading AISC (all-in sustaining cost),” Endeavour president and CEO Sebastien de Montessus said in a statement.

Endeavour said the expansion project is expected to yield an incremental production of 1.35 million ounces (Moz) of gold at a low AISC of $576 per ounce (oz) over the life of mine and boasts “robust economics” with an after-tax internal rate of return of 72%, net present value (NPV) at a 5% discount rate of $861 million and a quick 1.4-year payback period at a gold price of $1,700/oz.

The company noted that the expansion project is expected to add an incremental average production of 194,000oz per year, over its first five years of operations (2024 – 2028) at an average AISC of $531/oz.

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As such, it said the expansion project is expected to lift the Sabodala-Massawa complex to top tier status with an expected average annual production of 373,000oz per year over the next five years at an average AISC of $745/oz for the combined CIL and BIOX operation.

Additionally, Endeavour said strong upside potential exists as the DFS does not include the conversion of the previously announced discovery of 709,000oz of measured and indicated resources, which is expected to notably boost 2023 production.

“Given the robust project economics, which significantly exceed our investment criteria, and the strong exploration upside potential, we are excited to launch this low-capex intensive brownfield expansion project as it will continue to improve the quality of our operating portfolio and contribute to driving the group’s return on capital employed above our 20% target,” de Montessus continued. “In line with our capital allocation framework, we are very pleased to be able to pursue this organic growth opportunity while maintaining a healthy balance sheet and the financial flexibility to continue to deliver strong capital returns to shareholders.”

Endeavour Mining is one of the world’s senior gold producers and the largest in West Africa, with operating assets across Senegal, Cote d’Ivoire and Burkina Faso and a strong portfolio of advanced development projects and exploration assets in the highly prospective Birimian Greenstone Belt across West Africa.

Contact the author at stephen.gunnion@proactiveinvestors.com

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