Fortuna lifts West Africa growth with $1B Senegal gold project

A feasibility study for Fortuna Mining’s (TSX: FVI; NYSE: FSM) open pit Diamba Sud gold project in Senegal almost doubles its value, increases mine life and establishes probable reserves over a previous study from last year, though costs also rose.

The study gives Diamba Sud a post-tax net present value (discounted at 5%) of $1 billion and a mine life of 9.4 years, more than a year longer than in the preliminary economic assessment (PEA) from last year, Fortuna reported Monday.

The study assumed a base case gold price of $3,500 per oz., up from $2,750 per oz. in the PEA, following spot prices gains of about 7% since the PEA was released last October. The project is about 600 km east of the capital Dakar.

“Diamba Sud’s feasibility study is slightly better than our prior forecast, with higher production and mine life partly offset by capex and all-in sustaining costs that were also slightly higher,” BMO Capital Markets analyst Kevin O’Halloran said in a note.

Initial capital costs rose 40% to $398 million and all-in sustaining costs are up 8% to $1,332 per ounce.

$896M asset value

But despite the higher costs, O’Halloran added that his net asset value assessment for Diamba Sud rose 12% to $896 million, which also incorporates the longer mine life and total production that increased 25% over the PEA to 1 million ounces.

Diamba Sud now has an estimated probable reserve base of 20.5 million tonnes grading 1.75 grams gold per tonne for 1.1 million oz. gold. Due to the higher costs in the feasibility study, Diamba Sud’s internal rate of return fell 12 percentage points to 60%.

The feasibility positions Diamba Sud as one of Fortuna’s key future mines as the company continues to advance as a West African gold producer, complementing its main Séguéla mine in Côte d’Ivoire.

Fortuna shares gained 1% to C$12.02 apiece on Tuesday morning in Toronto, for a market capitalization of C$3.5 billion ($2.5 billion).

West Africa output rising

The study’s release also comes as the company advances its Séguéla expansion, which combined with Diamba Sud is expected to significantly boost Fortuna’s production in the region, O’Halloran said. He forecasts Séguéla’s annual output to rise 40% to 214,000 oz. by 2029.

“Diamba Sud is a standout growth project with high returns, fast payback, and is expected to be our lowest-cost mine,” Fortuna CEO Jorge A. Ganoza said in a release.

“With the recent receipt of the environmental decree from the Senegalese government and the feasibility study complete, we are ready to move Diamba Sud toward a final investment decision upon completion of the mining permit process.”

First gold 2028

Fortuna’s next steps for Diamba Sud include early works such as an access road and camp expansion. It has budgeted $73 million for those activities. Full construction could start in this year’s fourth quarter, with first gold targeted before the end of the second quarter in 2028.

Diamba Sud sits in the Kenieba-Koudougou inlier, an area straddling eastern Senegal and western Mali that hosts several large gold deposits. Fortuna inherited the project in 2023 when it acquired Africa-focused explorer Chesser Resources.