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Avesoro Resources Announces Operational And Guidance Update

Mining News - Published on Wed, 12 Jun 2019

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Avesoro Resources Inc, the TSX and AIM listed West African gold producer, announced the following operational update including revised full year production and cost guidance. Mr Serhan Umurhan CEO of Avesoro said that “During Q1 and thus far in Q2, the Company has experienced significant ore dilution at the Youga Gold Mine which we have focussed on remediating to maintain sufficient ore grades to the ROM pad.”

Following a comprehensive cost review, we have implemented an initiative to transition both Youga and New Liberty to contractor mining to further reduce the mining cost at both mines whilst increasing mining volumes. As part of this initiative we have seen a temporary reduction in operating performance and associated inefficiencies at both assets. At Youga, this has resulted in the open pit mining fleet operators refusing to work. If the situation at Youga is not resolved on or before June 12, 2019 gold production at Youga will be temporarily suspended. Negotiations are on-going between both parties and I am optimistic that we can find a mutually acceptable resolution to this issue in the near future. The planned transition to contractor mining at New Liberty has also resulted in disruption to mining activities and gold production, with production materially deviating from budget in April and May as a result.

Mr Umurhan said that “I expect the downside of this initiative to be short lived and that the anticipated reduction in mining costs will be beneficial to the Company over the longer term. However, as a result of the aforementioned issues, production guidance for 2019 has been reduced to 180,000 – 200,000 ounces. Assuming the stoppage in mining operations at Youga is resolved quickly, we expect a funding shortfall of between USD 25 milliion to USD 30 million later this year. I am confident that these short-term challenges will be quickly overcome, and the Company’s focus remains firmly on delivering production from both mines in line with the forecasts within the Technical Reports whilst delivering a successful transition to underground mining operations at New Liberty within the next two years.”

Youga Gold Mine, Burkina Faso

As highlighted in the Company’s Q1 2019 Production Results announced on April 11, 2019 unexpected ore dilution had been a feature in Q1 2019. This has continued into Q2 with the average mined grade at the Gassore satellite pit during the 5 months ended May 31st 2019 substantially lower than the reserve grade of 3.74 gram per tonne published in the updated Mineral Reserve estimate announced on May 8th 2019.

In order to address the unplanned dilution, the mining rate at Gassore has been reduced and as a consequence, mining volumes YTD are c. 14% behind budget. The shortfall in ore tonnes mined has been supplemented by low grade stockpiles to maintain mill feed levels. This has resulted in a mill feed grade for the year to date of 1.87 gram per tonne compared with a budgeted feed grade of 2.94 gram per tonne. Provisional, unreconciled production from Youga for the YTD was 30,700 ounces.

An initiative, driven directly by the Company’s Chairman Mr Mehmet Nazif Günal, to transition Youga to contractor mining is also being implemented with the objective of further reducing mining costs. As part of this initiative and a drive to reduce costs in general the Burkinabe employee headcount has been reduced by c.300 employees, most of whom were employed within the mining department.

New Liberty Gold Mine New Liberty

At New Liberty in Liberia, the Company, also under the direct supervision of the Chairman, commenced an initiative to the transition from owner mining operations to contractor mining operations. During April 2019 a number of staff in the existing HME maintenance team chose to resign rather than accept the alternative employment terms being offered by the incoming mining contractor, Demir Kose Insaat Turizm Tasimacilik Ithalat Ihracat Sanayi Ticeret AS. As a consequence, production at New Liberty in April was reduced to 3.4koz before increasing to 8.1koz in May 2019.

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Posted By : Rabi Wangkhem on Wed, 12 Jun 2019
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