West African Resources (ASX:WAF) expects its Sanbrado gold mine to be a highly profitable operation producing as much as 301,000 oz in the first year.

All-in sustaining costs (AISC) of $US497 ($692.95) an oz in the first year would see the company make a nearly 62 per cent profit at a forecast price of $US1,300 an oz.

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That works out to be an initial $US241.7m profit.

“The optimised feasibility study confirms that Sanbrado is a high-margin gold project, producing 217,000 ounces gold per annum at AISC of US$563/oz over the first five years mine life and 153,000oz per annum gold over the current 10-year mine life,” managing director Richard Hyde said.

The improved metrics mean West African Resources will pay back the $US186m pre-production capital costs in just 14 months.

West African Resources has increased the post-tax net present value (NPV) to $US444m and internal rate of return (IRR) to 62.1 per cent.

IRR and NPV are used to estimate the profitability of a potential operation – the higher they are above zero, the better they are.

The Sanbrado mine is in Burkina Faso, which is Africa’s third largest exploration jurisdiction for gold and the continent’s fourth largest producer.

West African Resources continues to find high-grade gold, reporting record hits of up to 860 grams per tonne (g/t) from the M1 South deposit.

“Recent deep high-grade intercepts demonstrate the potential to extend reserves, and increase annual production post year six with additional infill and extensional drilling,” Hyde said.

Drilling has extended the life of the M1 South underground mine to 6.5 years and increased the probable reserves to 1.7 million ounces.

Reserves refer to discoveries that are commercially recoverable using existing technology, while resources are either not yet commercially viable or are mere speculation.

Reserves are often broken into “proven” and “probable”.

A proven reserve is an estimated quantity of a mineral or oil or gas that is able to be economically recovered with high certainty. Probable reserves are a bet each way at about 50 per cent certainty.

“We are fully funded with construction underway and first gold pour scheduled in Q3 2020,” Hyde said.


In other gold news:


Bardoc Gold (ASX:BDC) has reported “bonanza” grade hits of up to 70.5g/t from drilling at its Zoroastrian deposit in Western Australia. There is no agreed-upon, official definition for “bonanza” grade – but anything over 5g/t gold is considered high-grade. Bardoc has also confirmed the depth potential at its South Castlereagh prospect with high-grades of up to 6.63g/t from 152m deep.

Drilling at Nexus Minerals’ (ASX:NXM) Crusader prospect in Western Australia has unearthed high-grade gold of up to 20.13g/t from just 30m down.

Saturn Metals (ASX:STN) says it has defined a new higher grade lode at its Apollo Hill gold project. Drilling has returned intercepts including 10m at 5.78g/t, including 5m at 11g/t, from 46m. The results will be included in an updated resource due out in mid- to late-2019.