Ground Breakers: Tietto blesses the rains down in Africa with Abujar gold mine debt funding

African gold miners have been among the ASX’s quiet achievers over the past year, and Tietto Minerals (ASX:TIE) is no exception.

Tietto is not quite a miner yet, but does own the Abujar gold project in Cote d’Ivoire in West Africa.

Proposed as a potential takeover target for regional players like West African Resources (ASX:WAF), Perseus Mining (ASX:PRU) and other mid-tier gold producers, it seems like it will be able to go ahead and build Abujar itself.

Tietto this morning announced it has secured up to US$140 million of debt funding through a mandate to Taurus Mining Finance, putting it on track to build and pour first gold from Abujar by the end of 2022.

The project has a total capex of US$200 million and some pretty tasty economics backing it.

Abujar boasts a $1.3 billion pre tax and $970 million post-tax NPV, with first year gold production of 260,000oz and steady state production of 200,000ozpa over the first six years of its 11 year mine life.

That gives the mine a post tax internal rate of return of 95%, good going by any measure.

The debt provisions include no penalties for early repayments and no gold hedging requirements.

$200m-capped Tietto also has a bountiful cash balance of $32.8 million, and a further $10 million in options likely to be exercised in December.

The five year loan will be underwritten by Taurus, which will complete due diligence before providing a committed offer.

“We are extremely pleased to be working with Taurus who can deliver the funds needed on our timeline,” Tietto managing director Caigen Wang said.

“Our experienced project build team has been advancing early works and now have confidence the debt funding will be in place as they proceed with the major works needed to develop the Abujar Gold Project into West Africa’s next gold mine.”

Tietto Minerals share price today:

OZ Minerals ramps up reserves at Prominent Hill & West Musgrave

OZ Minerals (ASX:OZL) is embarking on a big expansion of its Prominent Hill mine in South Australia with the approval in August of its Wira shaft development.

The expansion, which will see mining continue out to 2036 at a rate of 6Mtpa and increase overall copper and gold production by 23%, will see underground ore reserve tonnes increase by 26% to 48Mt.

“The expansion will see a long and productive future for Prominent Hill with the Wira shaft enabling access to areas previously thought uneconomic and opening up potential new prospects,” OZ MD Andrew Cole said.

“Around 67Mt of Mineral Resource still sits outside our shaft enabled mine plan and we anticipate being able to convert some of this material into Ore Reserves over the coming years as we gain better access to drill the lower areas of the deposit.”

That represents an increase of 27% for copper metal and 31% for gold metal at OZ’s flagship mine.

An increase in ore reserve tonnes of 15% was also realised at West Musgrave, which straddles the WA and SA border.

The company’s December 2020 PFS outlined an ore reserve of 253Mt at 0.35% copper and 0.32% nickel.

Around 47.5km of infill drilling was completed at the West Musgrave project in 2021, with an updated mineral resource and ore reserve due in 2022.

The $8.4 billion capped copper miner is still drilling out its Carrapateena mine until the first quarter of next year, with an updated mineral resource and reserve due in Q4 next year.

It has also announced a maiden mineral resource of 5.8Mt at 2.1% Cu and 0.35g/t gold at Santa Lucia in its Carajas province in Brazil, where the Antas North pit was depleted this year.

All in all, OZ saw ore reserve copper metal increase by 5% since November 2020, with resource tonnes up 2% to 10.3Mt of copper metal.

OZ shares slid 1.18% this morning amid a broadly negative morning for the big miners.

Rio Tinto (ASX:RIO) (-1.41%), BHP (ASX:BHP) (-2.11), Champion Iron (ASX:CIA) (-2.25%) and MinRes (ASX:MIN) (-0.22%) were off after China’s timid steel production figures for October were reported yesterday, a 23.3%YoY fall to just 71.58Mt.

FMG (ASX:FMG) bucked the trend, rising 0.35%. Maybe Andrew Forrest’s seemingly outlandish figures on its future green hydrogen production is proving a hedge for the Pilbara iron ore miner against the iron ore price.

Base metals were weaker after residential housing sales in China hit the skids, but industrial production growth did bounce to rise 3.5%, suggesting the worst of China’s power issues may be over.