LONDON (Alliance News) - Alecto Minerals PLC shares rose on Tuesday after it said it has completed an internal scoping study on an enlarged project following on from its joint venture agreement with Desert Gold Ventures Inc back in March.
The pair signed a co-operation agreement to jointly develop their neighbouring gold deposits in Mali. The pair have now completed an internal scoping study on the enlarged project, which joined Alecto's Kossano East project and Desert Gold's Farabantourou project.
Alecto shares were up 35% to 0.135 pence per share on Tuesday morning.
The internal scoping study has suggested there are "significant cost savings" to be made by jointly developing the two projects.
Combined, those two projects have a total estimated resource of around 365,000 ounces of gold.
The study shows annual production at the enlarged project could be around 27,000 ounces of gold, which would generate around USD97.5 million in revenue over an initial three-year mine life, based on a gold price of USD1,200 per ounce. The cash costs are expected to be around USD582 per ounce.
Gold was trading at around USD1,127 per ounce on Tuesday morning.
The pair will need around USD14.3 million to get the enlarged project into production, with a payback period of around 12 months.
The enlarged project is considered to have a net present value of around USD27.4 million with an internal rate of return of around 107%. That is also based on a USD1,200 per ounce gold price.
The study has also shown the potential to extend the project through further exploration, which could b funded from cashflow generated by the project itself.
"Through our collaboration with Desert Gold since March, we have been able to demonstrate the potential for the joint development of Farabantourou and Kossanto East in line with our stated strategy of becoming a gold producer in the near to mid-term," said Chief Executive Mark Jones.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
