It just shows how good the project is,” chief executive Neil Woodyer said in an interview at the Mines and Money conference in London.
“In 22 months we’ve generated all the cash that has been invested in the project, which is a phenomenal period of return.”
The shareholder loans funded the $145 million mine construction cost and other historic development costs including feasibility studies and exploration programs. Significantly, this short return was achieved as the gold price slumped during the payback period, currently $200 per ounce below its price nearly two years ago.
The news is obviously significant for the West African country’s government. “They have been receiving a royalty but will now also be sharing in the profits and any distributions going forward,” said Woodyer.
The state of Ivory Coast and SODEMI (the state-owned mining company) hold a 10% and a 5% free carried interest, respectively.
In 2014, Agbaou produced 146,757oz of gold at a mine-level AISC of $621/oz. For 2015, the mine is expected to produce 150,000-155,000 ounces at a mine-level AISC cost of $690-$740/oz.
The news comes not long after the company closed its La Mancha transaction, which involved the introduction a new cornerstone investor that injected capital and more Ivory Coast assets into the business.
In his presentation to delegates, Woodyer said the deal created a platform for opportunities in Africa.
When asked to elaborate on the kind of opportunities he saw, Woodyer said: “What we need to do is progressively improve the quality of our assets. Agbaou did this because it has a lot of exploration potential and it has a low all-in sustaining cost and good cash generator. So it is certainly ranked now as our best asset.
“Whatever we do we should be raising the quality of our assets. Houndé does that in terms of its length, in terms of its cost and in terms of the cash and it can generate. So any acquisition we do has to stack up against that kind of improving asset.
“There is no point in us buying another feasibility process project because we have got two. So why pay somebody when you have already got two. And ours stack up very well compared with comparatives in West Africa.”
The company owns the Houndé gold project in Burkina Faso, which is nearing a development decision, while the Ity mine, absorbed via the La Mancha deal, will soon have a feasibility study completed over its sulphide expansion.
The updated mine plan for Houndé released earlier this year estimated a total of 1.9Moz over a 10-year life at all-in sustaining cash costs of $711/oz. The after-tax IRR is 27.9% at a $1200/oz gold price. Up front capital was estimated at $325 million.
