TORONTO (miningweekly.com) – West Africa-focused gold miner Endeavour Mining expects the current political turmoil in Burkina Faso to set back the permitting schedule for its Houndé project at least until after elections had been held, expected within the next 90 days.

The country is under military rule after the army stepped in last week following the forced resignation of President Blaise Compaore.

Endeavour CFO Christian Milau told Mining Weekly Online that Endeavour expected a short-term delay in the mine’s permitting, at least until after elections had been held, and the company was hoping to receive permitting by the first quarter next year, if not before year-end as planned.

He explained that the timeline delay for the Houndé project would not be a significant issue for the company, because it would afford it more time to repay debt on its revolving facility before launching into the construction phase of Houndé and give it more time to conduct optimisation work on the project.

With the arrival of the fourth quarter, Endeavour expected to shift from two years of executing a capital-intensive strategy to improve the efficiency of its existing assets and build new and higher margin operations in Côte d'Ivoire, Mali, Ghana and Burkina Faso to managing existing assets to increase cash flow and deleverage its balance sheet.

“Once we get the permit, we have at least two years in which to start construction and we don’t have to finish it in that time,” Milau highlighted.

He pointed out that for the company, it was ‘business as usual’ in Burkina Faso, where it also operated the Youga mine, which produced 18 432 oz of gold in the three months ended September.

He reported that the company had seen the country reopen its borders and airports over the last 24 hours, with reports circulating that “things have settled down” somewhat.

Milau added that the Burkina Faso army seemed to have taken a strong lead at the moment, under the watch of France and the US, and was intent on seeing national elections through within three months of it seizing power.

“We obviously have a heightened sense of awareness for violence, but we are not located near the centres where it took place,” he said.

Milau also noted that there was a low risk that there would be a degradation of the law and its institutions in the governmental transition period.

“We have in place the mining convention and any contravention of that would constitute breaking the law. The country is very mining friendly and the army had even made comments about specifically protecting the gold mines, because they understand the value it brings to the local economy,” Milau noted.

Burkina Faso is a bright spot in West Africa, where there are about eight new mines in the pipeline, as well as several exploration targets.

HOUNDÉ HIGHLIGHTS

 HOUNDEHoundé has a proven and probable reserve of 25-million tonnes, with an average grade of 1.95 g/t of gold.

A National Instrument 43-101-compliant feasibility study completed on the Houndé project has proved positive for an openpit gold mine.

The feasibility study focuses on the Vindaloo group of deposits that are located about 250 km south-west of Ouagadougou, the capital city of Burkina Faso.

The feasibility study envisages production of 178 000 oz/y of gold over an 8.1-year life-of-mine (LoM), with a total LoM production of 1.44-million ounces.

Average gold recovery of 93.3% is forecast using a semiautogenous/ball mill grinding circuit, followed by processing through a gravity/carbon-in-leach plant capable of treating three-million tonnes a year of ore.

Start-up capital is estimated at $315-million and permitting is in place, while engineering, procurement and construction is estimated at 21 months from board approval to first gold production.

For the third quarter, Endeavour on Tuesday reported earnings attributable to shareholders of $1.9-million, or nil a share, compared with a net loss of $15.3-million, or $0.04 a share, for the same period in 2013, while adjusted net earnings were $1.5-million, or nil a share, compared with an adjusted net loss of $2-million, or nil a share, for the same period in 2013.

Revenue increased by $24.1-million to $145.2-million, mainly boosted by the addition of the Agbaou mine, Endeavour’s fourth operating mine.