Orca Gold (TSXV: ORG) subsidiary Montage Gold (TSXV: MAU) has exceeded its exploration objective at the Koné gold project in Ivory Coast with 100% resource conversion and resource growth.
Montage reported a maiden indicated resource for Koné, outlining 225 million tonnes grading 0.59 gram per tonne for 4.27 million oz. at a 0.2 gram per tonne cut-off grade.
Notably, the new resource estimate also entails a higher-grade component to the deposit, increasing in size, grade and confidence level. It comprises 77 million tonnes indicated, grading 1.0 gram per tonne for 2.55 million oz. at a 0.6 gram per tonne cut-off grade.
Montage also released an updated inferred resource of 22 million tonnes grading 0.45 gram per tonne for 320,000 oz. at a 0.2 g/t cut-off grade.
Montage CEO Hugh Stuart said the exploration strategy now pivots from infill to growth.
“Our goal was to demonstrate a high level of conversion from inferred to indicated and we have exceeded our objective with 100% conversion and additional resource growth. It is also significant that the grade profile of the deposit has remained consistent with grades used in the preliminary economic assessment (PEA) released in May,” Stuart said.
“The Koné continues to demonstrate the benefits of scale with its wide zones of homogenous mineralization (true widths exceeding 250 metres in areas) and a low strip ratio (less than 1:1). In addition, with over 100,000 metres of drilling now completed we have more detail and a better understanding of the higher-grade areas of the deposit,” he said.
The transition from an Inferred resource estimate to a maiden Indicated resource is a critical step towards the company’s first mineral reserve estimate, which will form the basis of the feasibility study.
The feasibility study is said to be on track for delivery by year-end 2021. The May PEA outlined an 11 million tonnes per annum operation producing 3 million oz. of gold over a 14.7-year mine life.
Annual gold output is expected to average 249,000 oz. in the first nine years and 205,000 oz per year of the project’s life. Peak output of 308,000 oz. occurs in years two and three.
The PEA calculated an after-tax NPV (5% discount) of $652 million and an IRR of 31% at a base price assumption of $1,600 per oz.
Koné will cost $490 million to build, but low all-in sustaining costs during the initial three years of $835 per oz. makes for a relatively rapid payback of 2.8 years.
Stuart has previously described the project as potentially one of the most significant gold projects in an emerging African district.
“The key drivers of this are the simplicity of the project with true mineralized widths up to 330 metres, solid metallurgy lending itself to a standard flowsheet and low operating costs and a low-cost on-site power source. It is also important to note that the PEA represents a snapshot in time and the resource base has the potential to grow further,” Stuart said at the time.
The Koné project is about 350 kilometres north-west of Yamoussoukro, the political capital of Côte d’Ivoire, and about 600 kilometres north-west of Abidjan, the commercial capital of the country.
The project is near existing infrastructure, including grid power, transport and water resources.
Montage shares, listed in Toronto last October, last traded up 6.25% at C0.68 per share, but remains down 26% in the year-to-date period. Montage has a market capitalization of C$71.36 million ($55.7m).