https://www.engineeringnews.co.za

Sandspring on the hunt for major minerals, partner in Guyana

Collecting geochemical samples at Sandspring Resources Toroparu project, Guyana

Collecting geochemical samples at Sandspring Resources Toroparu project, Guyana

Photo by Sandspring Resources

14th March 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

Font size: - +

VANCOUVER (miningweekly.com) – Canada-listed project developer Sandspring Resources is firming up the resource base at the Toroparu gold project, in Guyana, with the focus on enticing a major partner to join the development of the nearly seven-million-ounce project.

“We’ve got the backing of major mining investors such as Frank Giustra and Silver Wheaton, making Toroparu an attractive opportunity for the majors to replenish their dwindling reserves,” CEO and director Rich Munson told Mining Weekly Online in a recent interview.

The company will undertake another round of exploration this year, aimed at converting more inferred resources into the measured and indicated categories, and focused on step-out drilling, before completing a feasibility study by year-end.

A 2013 prefeasibility study on Toroparu had outlined the development a 4.1-million-ounce gold reserve, with 6.9-million ounces of gold contained in the measured and indicated categories. The mine will produce gold at a rate of about 228 000 oz/y, over an initial 16‐year mine life.

EXPLORATION SUCCESS
However, recent discoveries of satellite deposits around Toroparu have the potential to change the nature of the project, Munson explained.

The company in February reported a maiden mineral resource estimate for its discovery at Sona Hill, a deposit located 5 km southeast of the Toroparu project. Completed by SRK Consulting, Sandspring reported a pit-constrained maiden gold-only resource having a total indicated resource of 195 000 oz of gold and an inferred resource of 241 000 oz at a cutoff grade of 0.31 g/t gold.

The deposit comprises a shallow lode-gold vein mineralised system near the main Toroparu pit, with 80% of total mineralisation located within 120 m of surface, within a single optimised Whittle pit; 25% of the total indicated resource contained in weathered saprolite rock from surface; and mineralisation at Sona Hill remaining open at depth and along strike, Munson stated.

Systematic exploration has defined more than 10.4-million ounces of in-situ gold on three deposits to date, including 6.51-million ounces in the measured and indicated resource categories and 3.05-million ounces inferred at Toroparu; 384 000 oz measured and indicated and 45 000 oz inferred at the SE zone; and the 195 000 oz measured and indicated, plus 241 000 oz inferred at Sona Hill.

Munson stated that gold intercepts in saprolite and fresh rock at the fourth mineralised system, Wynamu Hill, as well as exploration results at Sona West and Otomung, support continuing exploration of this gold-rich property.

"Integrating Sona Hill into the mine plan will potentially provide us with the opportunity to defer mining the higher-grade combined gold – copper ounces currently scheduled early in the project life, lifting the average grade in the later years of the mine plan to create a more stable life-of-mine grade profile,” he said.

Munson noted that the company is currently trading at an enterprise value per ounce of gold resource of less than $6.90, reflecting significant investment upside as the price of gold rises.

Toroparu is at an advanced stage of development and permitting, with existing infrastructure, a mineral agreement, a fiscal stability agreement and an environmental authorisation in place. The company has further opportunity to reduce operating expenditures, particularly in the later stage of the mine’s life, by bringing hydroelectric power to site.

HYDROPOWER OPPORTUNITY
Munson noted that discussions with the Guyana government were ongoing about the opportunity to improve long-term project power costs through the construction of a 25 MW run-of-river hydropower facility in the Kurupung river.

Development of the full potential of the hydroelectric facility to more than 100 MW could provide significant cost benefits for other mining projects in north-western Guyana, and the Guyana power grid, he added.

ADVANCING THE PROJECT
Since closing a novel early deposit gold stream agreement with Silver Wheaton in 2013, Sandspring has been working closely with the precious metals streaming firm to determine the best way forward for the project, considering the tumultuous gold prices and exceptionally difficult capital market environment over the last few years.

Under the agreement, Silver Wheaton advanced $13.5-million to Sandspring to enable it to deliver a bankable definitive feasibility study on the Toroparu gold project, located in the Upper Puruni River region of western Guyana, by the end of 2015, after which Silver Wheaton would be able to choose whether to fund an additional $135-million for project construction.

The gold and silver purchase agreement could reduce the project capital expenditures by about 30%.

Munson explained that, by December 2014, the company had presented the internal financial model for the Toroparu project to Silver Wheaton, requiring only certain price updates and the formal packaging of the information into a National Instrument 43-101-compliant feasibility study.

However, both companies agreed that the estimated cost of around $500 000 to complete the feasibility study was wasteful, given that the capital markets were at the time all but shut to a junior project developer sitting with a four-million-ounce project at a grade of about 1 g/t gold.

By early 2015, with all field and design engineering work required for the feasibility study complete, the company chose, by mutual agreement with Silver Wheaton, to defer the additional expenditures required to complete the final stages of the study, such as value engineering and optimisation studies.

The early deposit streaming agreement was amended in April 2015 to include a silver stream, under which Silver Wheaton agreed to pay Sandspring incremental upfront cash payments totalling $5-million for 50% of the future payable silver output from the company’s Toroparu project. Late last year, the agreement was amended once more to extend the deadline by which Sandspring would have to deliver a feasibility study to December 2017.

“If we did not have an exploration target on our property, we would already have moved forward,” Munson, who has been involved with the Toroparu project for 16 years, said.

PREFEASIBILITY STUDY
The May 2013 prefeasibility study (PFS) outlined the design of an openpit mine producing more than 200 000 oz/y of gold over an initial 16‐year mine life. The PFS also estimated proven and probable gold reserves for the project based on a 0.3 g/t cutoff grade, $1 400/oz gold and $3.25/lb copper, resulting in 127.1-million tonnes grading 1 g/t gold and 0.11% copper, for contained proven and probable reserves of 4.1-million ounces of gold and 211-million pounds of copper.

These reserves were included in the overall mineral resource estimated at 6.89-million ounces of gold and 444-million pounds of copper contained within 240.2-million tonnes, grading 0.89 g/t gold and 0.084% copper in the measured and indicated mineral resource categories. A further 3.09-million ounces of gold and 120-million pounds of copper is contained within 129.5-million tonnes, grading 0.74 g/t gold and 0.042% copper in the inferred mineral resource category.

In February 2015, Sandspring also declared a silver resource at Toroparu, estimated to contain 240.2-million tonnes grading 0.82 g/t silver for 6.3-million ounces of silver in the measured and indicated category, along with 129.5-million tonnes grading 0.07 g/t silver for 310 000 oz of silver in the inferred category.

“The opportunity to find a joint venture partner is improving with the rising gold price. There are not many multimillion-ounce deposits out there ready to be built at grades of 1 g/t to 1.1 g/t. People will start looking at us again as prices stabilise and recover,” Munson stated.

The PFS calculated an after-tax net present value, at a 5% discount rate, of $691-million, with an internal rate of return of 23.1%. The capital requirement of $464-million could be paid back in 2.6 years. The project provides $1.25-billion in free cash flow over the life of the mine at PFS base case price of $1 400/oz gold, or $893-million at $1 260/oz gold.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Array

Showroom

Condra Cranes
Condra Cranes

ISO-certified Condra manufactures overhead cranes, portal cranes, cantilever cranes and crane components: hoists, drives, end-carriages, brakes and...

VISIT SHOWROOM 
SABAT
SABAT

From batteries for boats and jet skis, to batteries for cars and quad bikes, SABAT Batteries has positioned itself as the lifestyle battery of...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Photo of Martin Creamer
On-The-Air (15/03/2024)
15th March 2024 By: Martin Creamer
Magazine round up | 15 March 2024
Magazine round up | 15 March 2024
15th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.196 0.248s - 156pq - 2rq
Subscribe Now