A new competent person’s report on the Blyvoor gold tailings project puts owner Katoro Gold (LON: KAT) in a “very strong” position when it comes to funding talks, the firm said on Tuesday. Results of the work cemented the “robust technical and economic viability” of the gold tailings asset, which is based in South Africa.

Katoro is right now finalising a comprehensive funding package under its Blyvoor joint venture (“JV”), in which it has a 50% attributable interest. Blyvoor Gold Operations, a holding company of Target Mine Consulting, owns the other 50%.

The funding package will cover the construction, commissioning, and operation of a mining facility capable of processing, in total, an impressive 500,000 tonnes per month of tailings material.

The report put Blyvoor’s all-in sustaining cost at an estimated at $861 per ounce of gold, with a $1,067 per ounce all-in cost. Total project capital costs for the life of the project come to only $152 million, with a $69 million peak funding requirement.

This is based on a $ 1,610 per oz average gold price, significantly below the current $1,800 per oz price of gold.

“The project is very robust in all aspects and puts the Company in a very strong position to finalize funding discussions,” said executive chair Louis Coetzee.

Blyvoor’s average life of mine gold grade will be 0.29 grams per ton, with 51% confirmed recovery – this before including recovery gains from metallurgical optimisation tests.

In fact, these tests suggested possible recoveries up as much as 60% by milling the coarser fraction of feedstock, which makes up around 30% of the total run of mine.

Coetzee said Katoro is now working to find out the extent to which these higher recovery rates might improve Blyvoor’s “already robust project economics” with an update expected “in due course”.

The chair acknowledged that technical work has been delayed by South Africa’s Covid-19 related restrictions, but noted that this had actually “allowed for better and more detailed review and optimization work”.

The findings of the competent person’s report (“CPR”) were subject to results from previous metallurgical test work. Having received all outstanding results, Katoro can now validate the CPR’s findings and “further engage with prospective funders” to conclude funding arrangements.

Included in the CPR is an advanced pre-feasibility level study, as well as a SAMREC compliant reserve and resource statement plus a South African Mineral Asset Valuation report covering “Blyvoor TSF 1, 6 and 7 and Doornfontein TSF 1, 2 and 3 gold tailings storage facilities”. Here, TSF stands for “tailings storage facility”—a highly engineered structure consisting of one or more tailings dams designed to store gold-containing material.

Impressive CPR highlights also include a total project resource size of 1.4 million ounces (“oz”) of gold. Notably, this includes 500,000 measured ounces split between 368,000oz in the indicated category and 542,000 oz inferred. 

Elsewhere, TSFs 6 and 7 were upgraded to probable reserve status, with TSF 6 containing 424,000 oz gold while TSF7 has 392,000 oz.

Before incorporating metallurgical optimisation results, the CPR shows a $114 million unlevered project net present value. This is with a 33% internal rate of return and 64% return on investment.

The CPR also shows a 25-year life-of-mine (“LOM”), building to a 500,000 tons per month production capacity. Overall production is expected to be 675, 842 ounces of gold for the whole LOM.

Blyvoor is far from Katoro’s only gold project. There are also the Imweru and Lubando gold projects in Tanzania’s Lake Victoria Goldfields region. Elsewhere in Tanzania, the company’s Haneti project is prospective for nickel, platinum-group-elements and gold.

Gold is looking particularly strong at the moment, after the pandemic drove investors to seek safe havens. The gold price was declining at the start of 2021, when optimism around vaccines reached its height. However, the rose-tinted glasses have come off now amid a devastating second wave in India and the US looking unlikely to reach herd immunity.

With such excellent progress at Blyvoor, Katoro is in a great position to benefit from strengthening demand for the precious metal. As financing talks continue apace, the company seems set for a bright future.

Author: Anna Farley

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