Doug Reddy, Senior Vice President—Business Development, Endeavour Mining Corporation

Endeavour Mining boasts broad experience across West Africa.

Doug_Reddy-BLOGEndeavour Mining Corp. is a West African gold producer with three operating mines and another currently in commissioning. Could you provide our readers with a brief introduction to Endeavour?

DR: In 2009 the senior management of Endeavour decided to make a shift into operating mines. We targeted a group of companies and ultimately acquired Etruscan Resources Inc. and the company’s Youga Mine in 2010. At the time Youga had about 88,000 oz/y production. In 2011, Endeavour completed a merger with Adamus Resources Limited, which brought in the Nzema Mine, adding in another 100,000 oz/y. This was followed by the acquisition of Avion Gold, in 2012, which brought in the Tabakoto Mine, which at that time had 100,000 oz/y.

This year the company changed its strategy and looked at organic growth through expansion at the Tabakoto plant, doubling throughput and bringing the production rate of that mine to 150,000 oz/y. We also built and are in commissioning of the Agbaou gold mine which will provide us with an additional 100,000 oz/y. Total annual production capacity in 2014 will therefore be over 400,000 oz/y. At the same time we have established an operations base in the Ghanaian capital of Accra, to service our various mines.

Endeavour’s production guidance for 2013 is between 310,000 and 345,000 oz/y, with a record level of gold production announced in Q3 of this year. Could you provide an overview of your three producing mines?

DR: These mines share a number of commonalities in that they are in West Africa and located in Birimiam greenstone belts. They have similarities with regards to the host rock, structural setting, style of mineralization and also the processing methods that allow us to move personnel from project-to-project and support each other.

The Tabakoto Mine is located near the western border of Mali and it is in the same belt as Anglo Gold Ashanti and IAMGOLD Corp’s Sadiola Gold Mine and Randgold Resource’s Loulo Mine. Geologically the Tabakoto deposits are structurally controlled which allows us to plan and predict exploration as we work on defining additional resources and reserves at the mine over the next few years. We currently mine from the Tabakoto underground mine and the Djambaye II open-pit mine. The underground mine provides 1,500 mt/d to 1,600 mt/d. We have also expanded the Tabakoto plant from 2,000 mt/d to 4,000 mt/d throughput.

Endeavour is also developing the Segala underground mine, which is roughly five km away from the Tabakoto plant. Segala is a series of parallel mineralized zones, which provides us with the ability to mine a wider zone and will produce 1,500 mt/d to 1,600 mt/d, starting in the second quarter of next year. The goal is to shift our production to 80% underground and 20% open pit.

Our Nzema Mine is located on the south coast of Ghana, on the southern end of the Ashanti Trend. Endeavour mines from open pits at two areas, the Salman Trend and the Adamus pits. Our mining has been shifting from Salman to Adamus, with the latter constituting over 60% of our resources and reserves at Nzema. The plant operates at about 1.6 million mt/y to 1.9 million mt/y, with the difference being due to the hardness of material being processed through the plant. Recoveries over the remaining life of mine are around 87% and we benefit from being attached to the Ghanaian electricity grid. This year Nzema will provide between 102,000 oz/y and 107,000 oz/y at $850/oz to $900/oz.

The Youga mine is located in southern Burkina Faso, on the border with Ghana and is the most mature mine in our portfolio, having started in 2008. It has been a strong performing mine, though the smallest in our holdings. This year’s guidance is 87,000 oz/y to 92,000 oz/y at $740/oz to $780/oz.

Looking forward, Endeavour plans to exceed 400,000 oz/y in 2014, which includes the start-up of your Agbaou Gold mine in Cote d’Ivoire in Q1 of next year. What is the plan for Agbaou?

DR: Agbaou is located in south-central Cote d’Ivoire and has good access to some of the cheapest grid power available in West Africa. Currently we are at the start-up phase with commercial production slated for Q1 of 2014. Our team that built Nzema is at work at Agbaou and there are many geological similarities, providing confidence in our project planning and process design.

On November 6 Endeavour announced that its Feasibility Study at the Hounde Gold Project, showed the possibility of 180,000 oz/y over an eight-year mine life. Please provide our readers with an overview of this project.

DR: The same engineering company that provided EPCM services on Nzema and Agbaou was also used for the feasibility study for Hounde. The project benefits from several factors: proximity to a major highway; power lines from Cote d’Ivoire; and our familiarity with operating in Burkina Faso. The feasibility study concluded that a series of open pits along the Vindaloo trend hosts a proven and probable reserve of 25 million mt, at a grade of 2.0g/mt, for 1.5 million oz of reserve. Endeavour has submitted the feasibility study and the environmental and social impact statement to the government as part of the permitting process.

Your company has also spent to the tune of $15 million in exploration, with a primary focus on Tabakoto and your Kofi project. Could you talk to this exploration project?

DR: At Kofi we wanted to continue working at the project because it has 500,000 oz of indicated resources and 700,000 of inferred resources. With Tabakoto doubling in size we have a hungry mill and are looking at Kofi to eventually provide additional feed for the mill. There is also exploration upside at Kofi, given that it is on the same strike as the Loulo Mine, and we see opportunities to explore on the northern end of our property.

As a final word to our readers, when Global Business Reports returns in two to three years’ time where will we find Endeavour Mining Corp?

DR: Endeavour has been focused at each of the mines on optimization of the operations and to continue to reduce the costs of production. Having added more mines we have better purchasing power and have gone back to our suppliers and contractors and asked them to look at their rates. Endeavour has also been looking at owner mining options, to help bring down costs, which has already been done at the open pit at Tabakoto. The big push is to ensure that each of operations is targeting $800/oz or lower cash costs and all-in sustaining cost of $1,000/oz or lower in 2014.

This interview was conducted as part of the research conducted on African mining jurisdictions by Global Business Reports (GBR) as part of our partnership with African Mining Indaba LLC. The aim of this partnership is the production of the single most comprehensive intelligence report on the continent’s mineral sector. The Official Mining in Africa Country Investment Guide, will be launched next February 2014, as the only official publication providing country-specific information at Africa’s top mining event, the 2014 Investing in Africa Mining Indaba™ held in Cape Town, South Africa.

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