West African gold developer Papillon Resources has announced positive news regarding its flagship Fekola gold project in Mali.
A pre-feasibility study on the Fekola project has found average operating costs are around $US580 per ounce of gold and all-in-sustaining cash costs are about $US725 per ounce.
Today at midday gold was trading at $US1,250.70 per ounce.
Papillon managing director Mark Connelly said the pre-feasibility study had shown the Fekola project would elevate Papillon into the mid-tier of gold producers.
"The project is large scale, low cost and extremely robust", he said.
Mr Connelly said using a flat $US1,3000 per ounce gold price, the project had potential average annual pre-tax operating cash flows of about US$190 million.
"In fact, our sensitivities show that, using our current mining schedules, Fekola will still produce average pre-tax (post royalty) operating cash flows in excess of $US130 million per annum using a flat $US1,100 per ounce gold price," he said.
The study revealed the project has a minimum life of nine years and a minimum average production of 306,000 ounces per annum.
Papillon said the life of the mine had the potential to be significantly increased as only a small portion of the prospective area had been tested so far.
In March Papillon announced it had raised $52.9 million from the sale of 39.5 million ordinary shares at $1.34 apiece, which it said would go towards fast tracking the Fekola project.
Papillon's share price after the announcement was $0.68, up 16 per cent from yesterday but down from its most recent high of more than $1.70 in January.
