Fresh +300,000oz per annum producer West African Resources (ASX:WAF) will pay about $70m for the neighbouring Toega 1.1moz gold deposit.

The deal with Canadian miner B2Gold comes just one month after West African poured first gold at Sanbrado, which the company says is on target for +300,000 ounces of unhedged production in first 12 months.

‘Unhedged’ means the company can take advantage of rising gold prices, but this also leaves them exposed if prices fall.

Average annual production was to be 217,000oz over the first five years at “lowest quartile all in sustaining costs (AISC)” of less than $US600/oz ($921.55/oz). That’s already a huge profit margin at current gold prices.

AISC is generally a good measure to appraise the profitability of a project because it includes everything, from mining, refining and transport, through to administration and exploration.

The extra 1.1moz (and counting) expected from Toega is expected to increase the Sanbrado production profile and mine life even further “with a relatively low capital expenditure”, the company says.

It is anticipated that the Toega material may displace some lower grade ore from the M5 open-pit after the higher grade in the early years of the operation, thereby potentially increasing the Sanbrado production profile and extending the mine life past 10 years.

“Toega is expected to increase Sanbrado’s production profile and mine life,” West African exec chairman Richard Hyde says.

“We intend to kick off drilling and feasibility studies in the near future, with the aim of bringing Toega ore into the Sanbrado mine plan within three years.”

NOW READ: Barry FitzGerald — Investors pivot back to West African gold; these are the small caps to watch



In other ASX gold news today:

Advanced gold explorer MetalsTech (ASX:MTC) will have $4.1m in the bank to progress its Sturec gold project after a Chinese investor tipped in $2.5m by way of fixed price convertible notes.

The company separately raised about $1.125m via a placement to sophisticated investors at 16c per share.

“We are pleased to be expanding our relationships into China where gold is seen as a strategic commodity and is expected to be a focus of M&A activity in the next 18 months,” Metalstech director Dr Qiingtao Zeng says.

NOW READ: MetalsTech forced to go cyanide-free at its 1.1moz Sturec project