Cluff Gold expands its mining operations in West Africa

Cluff Gold (TSX:CFG) (AIM:CLF), a gold miner focused mainly in West Africa, announced on Friday that it will buy Orezone Gold’s Sega gold project mining licences and property in Burkina Faso for 11-million shares and $15-million in cash.

Located about 20 km by road from Cluff Gold’s Kalsaka project, the Sega project includes an indicated gold resource of 450,366 ounces and 8.3-million tons of ore at 1.69 g/t, and 147,344 ounces inferred resources in 2.9-million tons of ore at 1.58 g/t.

Cluff Gold said the acquisition would help the company increase the Kalsaka mine life significantly with limited upfront capital expenditure, with detailed metallurgical test work already completed by Orezone, indicating average heap leach recoveries of 85% for oxide and transitional ore, with favourable agglomeration properties.

“A preliminary economic assessment will start immediately to confirm the feasibility of a heap leach operation processing Sega’s oxide and transitional resources, while maintaining a throughput at Cluff Gold’s Kalsaka plant, in line with existing capacity of 1.6-million tons a year,” the company said in a statement.

Cluff Gold will pay Orezone $15 million (c£9.5 million) in cash along with 11 million new Cluff Gold ordinary shares. The company confirmed the acquisition would be financed from Cluff Gold’s existing cash resources. As at 31 December, Cluff Gold had $28.9 million in cash.

Completion of the transaction remains conditional on standard closing conditions, including the approval of the government of Burkina Faso and the approval of the TSX.

“The acquisition enhances the potential for our Burkina Faso operations to continue to provide significant cash flow through the development and early production from our flagship development asset, Baomahun, in Sierra Leone,” said Cluff Gold chief executive Peter Spivey.

According to Orezone’s CEO Ron Little, the transaction adds significant value for both companies and will provide more immediate cash flow for the government of Burkina Faso.

“The sale provides Orezone with a significant nondilutive financing to advance the development of its Bombore gold project, while still allowing the opportunity to participate in the upside at Sega through an equity interest in Cluff Gold,” added Little.

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