West African Resources study reveals low costs

Subiaco-based West African Resources says it will cost $US43.9 million to bring its Mankarga gold project in Burkina Faso to production, according to a scoping study released today.

 West African said construction of a processing plant would cost $US21.6 million, while other infrastructure and owner's costs would increase the capital cost to $US35.3 million.

General working capital and contingency funds make up the remainder of the $US43.9 million, the miner said. 

The study estimated a mine life of 5.4 years, with almost a quarter of a million ounces of gold production and a projected net present value of $US84 million.

The project would have an internal rate of return of 57 per cent, with a free cash flow of $US103 million after capital costs.

All-in cash costs would be $US685 an ounce, while the company used an assumed gold price of $US1,300 an ounce in its study.

The evaluation was managed by Mintrex, also based in Perth.

West African acquired TSX-V-listed Channel Resources Limited in January this year, who had previously had an interest in the deposit.

The company says its immediate focus is on development of this project.

Managing director Richard Hyde said “The study has shown that Stage one of the development of Mankarga 5 has a very short payback, high internal rate of return and NPV two and a half times capital costs.

“The study marks an important milestone for us as we can now transition from explorer to a low capital cost developer, which is an excellent achievement only six months after acquiring the Mankarga 5 project.”

West African was down 4.35 per cent to 11 cents per share at the time of writing.