Tag Archives: Avesoro Resources

Avesoro and Orkun Group enter open-pit mining contract at Youga

Avesoro Resources has made further headway on turning around operations at its Youga gold mine, in Burkina Faso, having entered into an open-pit mining contract with Orkun Group Sarl.

The mining program under the contract, secured by Avesoro’s Burkina Faso subsidaries, Burkina Mining Company SA (BMC) and Netiana Mining Company SA (NMC), is based on the excavation of between 800,000 to 900,000 bank cubic metres (bcm) of material per month, including a minimum of 120,000 t/mth of ore delivered to the run of mine (ROM) pad.

Youga, in the June quarter, saw production fall 19% quarter-on-quarter as falling grades and a stoppage in mining activities during June, which followed a transition to contractor mining, hit the operation.

Over the life of the Youga mine, the contract is based on the excavation of a minimum of 42 million bcm of material (Minimum TMM), which can be increased, at the company’s option, to 60 million bcm on the same terms. The contract price of excavation during this TMM period is $4.26/bcm (around $1.60/t) reducing to $3.75 per bcm thereafter (approximately $1.41 per tonne) for the remainder of the contract.

As part of the deal, Orkun will pay an earn-in fee of $0.51/bcm to acquire BMC’s existing heavy mining equipment fleet. The earn-in fee will be offset against the amounts invoiced by Orkun.

Upon completion of the Minimum TMM, ownership of BMC’s HME fleet will transfer to Orkun. However, Orkun assumes full responsibility for the ongoing upkeep and maintenance of the fleet from commencement of the contract, Avesoro confirmed.

“Orkun has also committed to supplement the existing HME fleet with $5 million of additional equipment at its own cost,” Avesoro said. This includes five excavators, 15 haul trucks and auxiliary equipment to ensure the contracted material movement is achieved. The first batch of this additional HME is due to arrive at Youga early in the September quarter.

BMC and NMC retain responsibility for mining geology, planning and certain other costs, Avesoro said.

Serhan Umurhan, Chief Executive Officer of Avesoro, said: “This contract will enable Avesoro to significantly reduce its future mining costs at Youga. Outsourcing the mining activity will also enable us to reduce our direct employee headcount and overall business complexity thereby reducing G&A costs.

“The responsibility for future fleet maintenance costs has also been transferred to Orkun, thereby significantly reducing the company’s 2019 funding shortfall that was announced on June 10, 2019.

“To achieve the material movement targets set out in the contract, Orkun will also supplement the existing Youga mining fleet…This should ensure a minimum of 120,000 t of ore is delivered to the ROM pad each month and that the Youga processing plant is maintained at full operating capacity.”

Avesoro enlists CSA Global for Youga gold mine turnaround

Avesoro Resources says it is expecting a “material improvement” in grade and production at its Youga gold mine, in Burkina Faso, after implementing mining and grade control recommendations from consultant CSA Global to stem an output drop that saw production fall 19% quarter-on-quarter in the three months ending June 30.

The mine’s output was affected not only by falling grades in the June quarter, but also a stoppage in mining activities during June, which followed a transition to contractor mining.

In the three-month period, total material movement was 4.44 Mt, 7% lower than the previous quarter. Waste mined also dropped 6% in this period to 4.23 Mt, while ore mined decreased 27% to 214,000 t, resulting in a waste to ore stripping ratio of 19.8:1.

Avesoro said: “During the period, mining focused predominantly on the Gassore pit adjacent to the Youga process plant, where mined grades continued to be below forecast. Following a review of both grade control and mining practices, undertaken by CSA Global, the company made the decision to bolster its on-site technical team by hiring of additional technical staff to manage mining production and grade control.”

Serhan Umurhan, CEO of Avesoro, said he was confident the company would see a “material improvement in the situation as a result”.

Due to the temporary stoppage in mining activities in June, some emergency low-grade ore stockpiles were blended into the plant feed during June, reducing overall June quarter run of mill grade to 1.59 g/t Au, a quarter-on-quarter reduction of 23%. An increase in plant throughput of 4% to 332,000 t during the period helped to offset the grade impact, however gold production fell 19% to 15,516 oz.

Avesoro’s New Liberty gold mine, in Liberia, meanwhile saw production drop 27% to 18,822 oz in the quarter.

The company put this down to a number of staff in the mining and heavy mining equipment maintenance teams resigning during April, which led to a drop in mining productivity during this month and early May. Total material movement dropped, which had a knock-on effect to mine ore grade and mill feed grade.

Despite the company only recording 34,338 oz of gold production from the two mines in the quarter – bringing first half output to 79,435 oz – Avesoro reiterated its revised production guidance of 180,000-200,000 oz of gold for 2019.

Umurhan said: “With the operational aspects of the transition to contractor mining at both Youga and New Liberty now in place, I am confident that the challenges experienced during Q2 (June quarter) have been overcome and that total material movement and gold production will increase in the second half of the year.”