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.”