Optimism high on $470 million Nyanzaga gold project

Arusha.Optimism is high on the Nyanzaga gold project expected to take Tanzania to another level in gold production.

The three mining sites near southwest of Mwanza city have probable ore reserves totalling 40 metric tonnes of gold.

Some $474 million will be injected as capital cost for underground development and open pit pre-strip.

Pre-production capital cost will also include plant and associated infrastructure while contingency will gobble up $36million.

Australian mining giant OreCorp announced yesterday that it was delighted the just concluded study has shown the project’s viability.

The study zeroed on the three sites; Nyanzaga open pit, Kilimani open pit and Nyanzaga underground.

OreCorp Limited is optimistic on gold mining at Nyanzaga, saying it will have a potential of “robust economics” for the country.

Combined open pit and underground production target of 42.5 metric tonnes at 2.07 g/t gold.

These comprise the Probable Ore Reserve plus Inferred Mineral Resources of 2.39 metric tonnes at 2.98 g/t.

According to a statement sent to The Citizen, peak gold production will be 295 koz per annum.

It will average 250 koz per annum in the first eight years or 242 koz a year for the first decade of excavation. The life of mine (LOM) at an average production schedule of 234 koz a year is estimated to be over 10 years.

The statement said discussions have commenced with the banks and other financial institutions

OreCorp says it is targeting 2025 as the year when gold production will start at the three sites, south west of Mwanza city.

Commencement of production will once again raise the country’s stake in the global gold production and market.

Tanzania is currently ranked the fourth largest gold producer in Africa after South Africa,Ghana and Mali and currently produces 40 tonnes a year.

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OreCorp’s CEO and managing director Mathew Yates is upbeat on the project following the just concluded ‘Definitive Feasibility Study’.

“Nyanzaga’s study has delivered impressive results across all key metrics”, he said, noting that it can produce more than 242 koz of gold per year for 10 years.

Production will be at a low cost of less than $1,000/oz of gold per year, with annual gold production peaking at 295 koz in year six.

Mr.Yates is confident that the company will be able to pay back the investment costs “within four years post-tax”.

With a post-tax Net Present Value of $ 618million and Internal Rate of Return of 25 percent “Nyanzaga has compelling metrics on the back of strong gold production”, he added.

The study or Definitive Feasibility Study (DFS) at the mine sites was undertaken by a global engineering firm called Lycopodium Minerals Pty Ltd.

The pre-production capital costs were originally estimated to be about $ 287 million but later spiked to $ 474 million.

The increase is largely attributed to overall cost inflation that is widespread in the mining industry over the past few years.

However, mining economists insist that the higher initial capital cost is often offset by the earlier gold production.