The construction of a hydro-electric plant (HEP) close to Hummingbird Resources PLC’s Dugbe Gold Project in Liberia could have a “material impact” on the economics of the planned mine, said chief executive Dan Betts.
His comment followed the publication of a pre-feasibility study assessing the potential benefits and costs of constructing a facility.
The work, funded by IFC InfraVentures, an offshoot of the World Bank, put the capital investment required at US$51.5 to US$143.5m, dependent on the size of option selected, which ranged from 10 to 30 megawatts of electricity.
Using a natural, green and, crucially, a cheap source of electricity will likely cut overheads significantly as power costs make up one-third of total operating expenses.
With no local grid access, the alternative would be to use diesel generator sets that guzzle huge amounts of fuel.
“Finding savings in this area will have positive implications to the project’s economics,” said CEO Betts.
The current all-in sustaining cost for Dugbe is put at just a tad over US$900 per ounce of gold produced, so any reduction to that figure would have a direct and significant impact on profit margins.
Hummingbird had been using an estimate of 28 cents per kilowatt-hour for electricity from rented diesel units. That figure falls to 5 cents over a 20-year mine life if hydro-electric power is used.
“This number does not compare directly, since it does not include the impact of the financing cost of building the hydro plant as it is not yet known how this will be done or by whom,” explained Betts.
“However, assuming a suitable financing solution was found, this could have a materially positive impact on the economics of the Dugbe Gold Project. Therefore, we are now considering our next steps with our partners on the PFS.”
While the Dugbe project has the potential to be Hummingbird’s biggest undertaking, the first cab off the block will be Yanfolila gold project in Mali.
Hummingbird is targeting first gold production at the mine next year and expects to process 132,000oz of gold in the first full 12 months.
After that, the company estimates a life of mine average production of around 107,000oz per annum. (Source:www.einnews.com).