Montage Announces Updated Feasibility Study at Koné Gold Project After-Tax NPV of $1.1B and 31% IRR and Two New Satellites to be Advanced
Press Release
Montage Announces Updated Feasibility Study at Koné Gold Project After-Tax NPV of $1.1B and 31% IRR and Two New Satellites to be Advanced Vancouver, British Columbia — January 16, 2024 — Montage Gold Corp. (“Montage” or the “Company”) (TSXV: MAU) (OTCPK: MAUTF) is pleased to announce the results of the Updated Definitive Feasibility Study (the “UFS” or the “Study”) for the Koné Gold Project (“Koné Gold Project”, “Project”, or “KGP”) located in Côte d’Ivoire, which now incorporates ore from the Gbongogo Main satellite deposit. The UFS was prepared by Lycopodium Minerals Pty Ltd. in accordance with Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Please note that all financial figures in this press release are in United States dollars, unless otherwise noted.
Highlights
- Significant Reserves and Production – A New Gold District in Côte d’Ivoire − 4.01Moz of Probable Mineral Reserves − 3.57Moz of gold produced over a 16-year mine life − Years 1-3: Avg. annual production of 349,000 oz at 1.15g/t avg. head grade − Years 1-8: Avg. annual production of 301,000 oz at 0.96g/t avg. head grade − Peak production of 378,000 oz in year 3
- Strong Financial Metrics – In an Increasing Cost Environment − $1,089M after-tax NPV5% and 31% IRR at base case $1,850/oz gold price − $1,456M after-tax NPV5% and 39% IRR at spot $2,050/oz gold price − Years 1-3: Avg. AISC1 of $899/oz − LOM AISC1 of $998/oz − Capital payback period of 2.6 years
- Optimizations Maintain Capital Efficiency – Further Improvements Expected − Pre-production capital requirement of $712M (vs $544M from 2022 DFS)
− $126M reduction in sustaining capital vs 2022 DFS − Net increase in LOM total capital requirements of 5% compared to 2022 DFS − Several areas identified to optimize pre-production capital
- Impact of Gbongogo Main Deposit − Gbongogo Main represents 12% of Probable Reserves and contributes $350M in pre-tax net cash flow in first 3 years of operations − Optimizes capital payback; demonstrates impact of satellite deposits − Planned haul road opens 38km corridor for priority exploration
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- KGP Construction Planned for Q4 2024 − Permitting process ongoing with all requisite approvals expected in Q3 2024 − Project financing process underway
- Drilling to Continue in January on Next Satellite Deposit Targets – Diouma North and Petit Yao − Diouma North is located 2km south of Gbongogo Main and <500m from planned haul road − Recent Diouma North drilling included: 17.45m at 2.75g/t, 11m at 2.21g/t and 14m at 2.16g/t − Petit Yao is located 3km from planned haul road − Previous Petit Yao results included: 12m at 4.15g/t, 6m at 10.82g/t, and 3m at 15.51g/t
Rick Clark, Montage CEO commented,
“The completion of the UFS for the Koné Gold Project is the culmination of a business plan of target identification, exploration, economic analysis, and development assessment and represents the hard work, dedication, and expertise since 2009 of what is now the Montage team. I am extremely proud of what this team has accomplished at the KGP since this opportunity was first recognized by Hugh Stuart (President of Montage) while investigating growth projects for Red Back Mining in 2008-09.
“In the three years since Montage went public, we have evolved from an exploration company with a 1.5Moz Inferred Mineral Resource into a development company with Probable Mineral Reserves of +4Moz and total Indicated Mineral Resources of nearly 5Moz. The KGP is now positioned to become the largest gold mine in Côte d’Ivoire with an expected average gold production of 349,000 oz per year during the initial 3 years of operations at an AISC of less than $1,000/oz, leading to a short payback on capital of 2.6 years.
“The primary objective of the UFS was to optimize the economics of the Koné Gold Project by incorporating higher grade tonnes from Gbongogo Main. This change has materially de-risked the financial parameters of the Project and demonstrates the significant impact of discovering higher grade satellite deposits within the broad 2,259 sq. km property package held 100% by Montage. We will now focus on repeating this success as we advance the next near-term satellite deposits within the KGP, notably Diouma North and Petit Yao, both of which are in close proximity to the planned haul road.
“The success we have achieved to date with the Koné Gold Project highlights Côte d’Ivoire as a premier jurisdiction for gold exploration and development. The combination of the geological endowment of Côte d’Ivoire and the business focussed political will of the Government of Côte d’Ivoire, represents a formula for mining success. Côte d’Ivoire is a partner in every respect in the development of its natural resources and the Koné Gold Project is a perfect example of this. The construction of the KGP will be the largest investment in a gold project in Côte d’Ivoire to date and we look forward to working with the Government of Côte d’Ivoire to realize success for all stakeholders.”
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A summary of operating and financial metrics from the UFS are presented in Table 1 below along with a comparison to the 2022 DFS. A summary model with annual projections over the project life has been included as Appendix 1 to this Release.
Table 1 – UFS Summary Metrics
| Metrics | Units | UFS | 2022 DFS | ||||
| Pit Optimization Gold Price | $/oz | $1,550 | $1,250 | ||||
| Financial Model Base Case Gold Price | $/oz | $1,850 | $1,600 | ||||
| Life of Mine | years | 16.0 | 14.8 | ||||
| Total Material Processed | Mt | 174.3 | 161.1 | ||||
| Contained Gold (Probable Reserves) | Moz | 4.01 | 3.42 | ||||
| Strip Ratio | w:o | 1.18:1 | 0.90:1 | ||||
| Average Annual Mining Rate | Mtpa | 42.4 | 35.0 | ||||
| Mill Throughput | Mtpa | 11.0 | 11.0 | ||||
| Average Head Grade, first 3 years | Au g/t | 1.15 | 0.93 | ||||
| Average Head Grade, first 8 Years | Au g/t | 0.96 | 0.81 | ||||
| Average Head Grade, LOM | Au g/t | 0.72 | 0.66 | ||||
| Processing Recovery, first 3 Years | % | 89.6% | 91.1% | ||||
| Processing Recovery, first 8 Years | % | 90.0% | 90.3% | ||||
| Processing Recovery, LOM | % | 89.0% | 89.3% | ||||
| Total Gold Production, LOM | Moz | 3.57 | 3.06 | ||||
| Average Gold Production, first 3 years | koz/yr | 349 | 285 | ||||
| Average Gold Production, first 8 years | koz/yr | 301 | 255 | ||||
| Average Gold Production, LOM | koz/yr | 223 | 207 | ||||
| Mining Cost Per Tonne Mined, LOM | $/t, mined | $3.22 | $2.73 | ||||
| Mining Cost Per Tonne Processed, LOM | $/t, processed | $6.68 | $5.20 | ||||
| Processing Cost, LOM (incl. rehandle) | $/t, processed | $8.94 | $8.04 | ||||
| G&A, LOM | $/t, processed | $0.98 | $0.93 | ||||
| Royalties, LOM | $/t, processed | $2.84 | $1.97 | ||||
| Total Operating Costs, LOM | $/t, processed | $19.83 | $15.89 | ||||
| Average AISC, first 3 years | $/oz | $899 | $824 | ||||
| Average AISC, LOM | $/oz | $998 | $933 | ||||
| Initial Capital Expenditure | $M | $712 | $544 | ||||
| Sustaining Capital (incl. Closure) | $M | $165 | $292 | ||||
| Total LOM Capital (incl. Closure) | $M | $877 | $836 | ||||
| NPV5%, pre-tax (100%) | $M | $1,437 | $992 | ||||
| Pre-tax IRR | % | 34.6% | 39.6% | ||||
| NPV5%, after-tax (100%) | $M | $1,089 | $746 | ||||
| After-tax IRR | % | 31.0% | 34.8% | ||||
| Payback Period | years | 2.6 | 2.7 |
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Details
Koné Gold Project Overview
The Koné Gold Project is located approximately 470km north-west of Abidjan, the commercial capital of Côte d’Ivoire. The Project comprises six exploration permits (PR262, PR748, PR842, PR879b, PR919 and PR920) covering 1,801 sq. km and two applications covering a further 456 sq. km, for a combined total of 2,259 sq. km.
The communities of Fadiadougou and Batogo lie 5km east and west respectively of the Koné resource area and the village of Gbongogo is located 4km north-west of the Gbongogo Main resource. The village of Dolourogoukaha will be impacted by the development pf the Gbongogo Main pit and will be resettled outside the affected area. Beyond this, the Project area is largely devoid of habitation with subsistence farming and cashew plantations being the dominant land use.
The nearest major centre is Séguéla, 80km to the south. The Project area is accessible year-round with an asphalt highway within 300m of the proposed plant location.
Figure 1: Location of Koné Gold Project
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Drilling to Start in January at Next Satellite Deposit Targets
Exploration during Q4 2023 focussed on continued assessment of the numerous targets within the KGP covered by the program in H1 2023 and several new areas of artisanal mining activity.
A key priority area is Diouma-Gbongogo-Korotou shear zone (Figure 2), a 15km strike length of soil anomalism, artisanal mining and 9 targets drilled to some degree, with the Gbongogo Main pit and planned haul road located at the south end.
In addition, Montage will be re-starting exploration at the Petit Yao target which sits 7km east of Koné and just 3km southeast of the planned haul road.
Figure 2: Diouma-Gbongogo-Korotou Shear Zone and District Target Areas
The Diouma North prospect is located 2km south of Gbongogo Main, and less than 500m from the planned haul road. As follow-up to reconnaissance and RC drilling in early 2023, Montage completed three diamond core holes, with highlight intercepts including: 14m at 2.16g/t from 58m (GBDDH062); and 17.45m at 2.74g/t from 79m and 11m at 2.21g/t from 127m (GBDDH064). Diamond drilling at Diouma will re-commence by the end of January with an initial core programme which, if successful, will be followed up with an RC programme with the aim of defining an initial resource by mid-2024. Results presented in Table 2 below represent intercepts that have intersected the targeted mineralized area. A complete set of previously unreleased results is included in Appendix 2 of this press release.
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Table 2: Highlight Drill Results from Diouma North
| Hole | From | To | Length | Au | |||||
|---|---|---|---|---|---|---|---|---|---|
| (m) | (m) | (m) | g/t | ||||||
| GBRC065* | 24 | 47 | 23 | 1.43 | |||||
| 53 | 75 | 22 | 1.55 | ||||||
| GBRC067* | 51 | 59 | 8 | 7.39 | |||||
| GBRC070* | 12 | 24 | 12 | 2.61 | |||||
| GBRC071* | 79 | 94 | 15 | 3.84 | |||||
| GBRC073 | 7 | 21 | 14 | 1.73 | |||||
| GBDDH062 | 58 | 72 | 14 | 2.16 | |||||
| GBDDH064 | 78.85 | 96.30 | 17.45 | 2.74 | |||||
| 127 | 138 | 11 | 2.21 | ||||||
| * previously released intercepts. |
The Petit Yao target sits approximately 7km east of the Koné deposit and 3km southeast of the planned haul road. It was first identified in late 2019 by Montage geologists recognizing prospective volcanic rocks in an area previously assumed to be un-prospective. Drilling completed at Petit Yao includes 3,392m of RC and 681m of shallow aircore, with highlight intercepts shown in Table 3 below.
Table 3: Highlight Drill Results from Petit Yao
| Hole | From | To | Length | Au | |||||
|---|---|---|---|---|---|---|---|---|---|
| (m) | (m) | (m) | g/t | ||||||
| MRCAC128* | 0 | 12 | 12 | 4.15 | |||||
| MRPYRC030A* | 37 | 43 | 6 | 10.82 | |||||
| MRPYRC039* | 28 | 31 | 3 | 15.51 | |||||
| MRPYRC049* | 35 | 39 | 4 | 8.31 | |||||
| * previously released intercepts. |
In H1 2022, an IP survey was completed over Petit Yao, which clarified a strong northwest trend to the underlying geology and has resulted in a re-interpretation which now extends over a strike of approximately 900m. This new interpretation will be drill tested in Q1 2024.
Mineral Resources and Reserves Estimates
Recoverable Mineral Resources were estimated for the Koné and Gbongogo Main deposits by Matrix Resource Consultants Pty Ltd. using Multiple Indicator Kriging (“MIK”).
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Koné Deposit
The Mineral Resource Estimate (“MRE”) for the Koné deposit has been re-stated based on an optimal pit shell generated using cost inputs in line with the UFS and a gold price of $1,800/oz with an effective date of 19 December 2023.
Table 4 shows the Indicated and Inferred Mineral Resource estimates at a range of cut-off grades.
Table 4 – Koné Mineral Resource Estimate
| Cut-off Grade | Indicated | Inferred | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Au g/t | Mt | Au g/t | Au Moz | Mt | Au g/t | Au Moz | |||||||
| 0.1 | 286 | 0.50 | 4.60 | 37 | 0.3 | 0.36 | |||||||
| 0.2 | 229 | 0.59 | 4.34 | 25 | 0.5 | 0.40 | |||||||
| 0.3 | 170 | 0.70 | 3.83 | 16 | 0.6 | 0.31 | |||||||
| 0.4 | 130 | 0.81 | 3.39 | 10 | 0.7 | 0.23 | |||||||
| 0.5 | 100 | 0.92 | 2.96 | 7.0 | 0.8 | 0.18 | |||||||
| 0.6 | 78 | 1.03 | 2.58 | 5.0 | 0.9 | 0.14 | |||||||
| 0.7 | 61 | 1.14 | 2.24 | 3.0 | 1.1 | 0.11 | |||||||
| 0.8 | 47 | 1.25 | 1.89 | 2.0 | 1.2 | 0.08 |
Notes:
1. The MRE is reported on a 100% basis and is constrained within an optimal pit shell generated at a gold price of US$1,800/ounce.
2. The identified Mineral Resources are classified according to the “CIM” definitions of Indicated Mineral Resources and Inferred Mineral Resources.
3. The MRE was prepared by Mr. Jonathon Abbott of Matrix Resource Consultants of Perth, Australia who is a Qualified Person as defined by NI 43-101.
4. The estimate at 0.2g/t represents the base case or preferred scenario for Koné.
5. Mineral Resources are reported inclusive of Mineral Reserves.
6. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
7. Figures are rounded to reflect the precision of the estimates.
Gbongogo Main Deposit
The Mineral Resource Estimate (“MRE”) for the Gbongogo Main deposit is constrained within an optimal pit shell generated using cost inputs in line with the UFS and at a gold price of $1,800/oz with an effective date of 19 December 2023.
Table 5 shows the Indicated and Inferred Mineral Resource estimates at a range of cut-off grades.
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Table 5 – Gbongogo Main Indicated Mineral Resource Estimate
| Cut-off Grade | Indicated | ||||||
|---|---|---|---|---|---|---|---|
| Au g/t | Mt | Au g/t | Au Moz | ||||
| 0.2 | 15 | 1.16 | 0.56 | ||||
| 0.3 | 14 | 1.26 | 0.57 | ||||
| 0.4 | 12 | 1.37 | 0.53 | ||||
| 0.5 | 11 | 1.48 | 0.52 | ||||
| 0.6 | 9.9 | 1.59 | 0.51 | ||||
| 0.7 | 8.8 | 1.71 | 0.48 | ||||
| 0.8 | 7.8 | 1.83 | 0.46 | ||||
| 0.9 | 6.9 | 1.96 | 0.43 | ||||
| 1.0 | 6.1 | 2.09 | 0.41 |
Notes:
1. The MRE is reported on a 100% basis and is constrained within an optimal pit shell generated at a gold price of US$1,800/ounce.
2. The identified Mineral Resources are classified according to the “CIM” definitions of Indicated Mineral Resources and Inferred Mineral Resources.
3. The MRE was prepared by Mr. Jonathon Abbott of Matrix Resource Consultants of Perth, Australia who is a Qualified Person as defined by NI 43-101.
4. The estimate at 0.5g/t represents the base case or preferred scenario for Gbongogo Main.
5. Mineral Resources are reported inclusive of Mineral Reserves.
6. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
7. Figures are rounded to reflect the precision of the estimates.
Combined Resources
Table 6 shows the combined resources based on the preferred cut off grades for each deposit.
Table 6 – Combined Resources
| Cut-off Grade | Indicated | Inferred | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Au g/t | Mt | Au g/t | Au Moz | Mt | Au g/t | Au Moz | |||||||
| Koné 0.20 g/t | 229 | 0.59 | 4.34 | 25 | 0.5 | 0.40 | |||||||
| Gbongogo Main 0.50 g/t | 11 | 1.48 | 0.52 | - | - | - | |||||||
| Total | 240 | 0.63 | 4.87 | 25 | 0.5 | 0.40 |
Notes:
1. Figures are rounded to reflect the precision of the estimates and include rounding errors.
The Mineral Reserve estimate was prepared by Carci Mining Consultants Ltd., dated as of January 15, 2024 and is presented below in Table 7.
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Table 7 – Mineral Reserve Estimate
| Pit | Classification | Oxide | Transition | Fresh | Total | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mt | Au | Au | Mt | Au | Au | Mt | Au | Au | Mt | Au | Au | ||||||||||||||
| g/t | Moz | g/t | Moz | g/t | Moz | g/t | Moz | ||||||||||||||||||
| Koné South | Probable | 9.6 | 0.58 | 0.18 | 7.0 | 0.60 | 0.13 | 145.3 | 0.67 | 3.18 | 161.9 | 0.67 | 3.49 | ||||||||||||
| Koné North | Probable | 0.9 | 0.47 | 0.01 | 0.4 | 0.44 | 0.01 | 0.4 | 0.51 | 0.01 | 1.9 | 0.47 | 0.03 | ||||||||||||
| Gbongogo Main | Probable | 0.7 | 1.36 | 0.03 | 0.5 | 1.09 | 0.02 | 9.4 | 1.46 | 0.44 | 10.7 | 1.43 | 0.49 | ||||||||||||
| Total | Probable | 11.3 | 0.63 | 0.23 | 7.9 | 0.63 | 0.16 | 155.1 | 0.73 | 3.62 | 174.3 | 0.72 | 4.01 |
Notes:
1. The Mineral Reserves are classified according to the “CIM” definitions.
2. All Mineral Reserves were classified as Probable based on the Indicated Mineral Resource.
3. The Mineral Reserve cut off grade range from 0.19 g/t to 0.49g/t based on a $1,550/oz gold price.
4. The Mineral Reserve statement was prepared by Joeline McGrath of Carci Mining Consultants Ltd, who is a Qualified Person as defined by NI 43-101.
5. The figures in this table are rounded to reflect the precision of the estimates and may include rounding errors.
Updated Definitive Feasibility Study Overview
The UFS is based on three open-pit gold deposits feeding a central gold processing facility (Figure 3). The Project will produce an average of 223,000 ounces of gold per year over the life of the mine. The initial life of the Project is 16.0 years. There is upside potential through regional exploration and identification of satellite pits similar to Gbongogo Main that could be mined and trucked to a central processing facility.
Initial capital to fund construction and commissioning is estimated at $712.1 million with total capital estimated at $877.5 million over the LOM including closure costs. All-in sustaining costs1 are estimated at $899 per ounce during the first three years of the Project, well below the current industry average, and $998 per ounce over the life of the Project. Processing costs of $8.35/t position the Project to be able to take advantage of mining satellite pits identified through ongoing exploration.
The financial analysis performed from the results of this UFS demonstrates the economic viability of the Koné Gold Project using the base case gold price assumption of $1,850 per ounce. This results in an after-tax net present value cashflow at a 5% discount rate (NPV5%) of $1,089 million and an aftertax IRR of 31.0% (both on a 100% basis) with a 2.6 year payback.
The Company is highly confident that there are additional opportunities to further strengthen the Project through the continued drilling and testing of satellite targets and optimizing efficiencies on select capital costs.
The study was prepared for Montage by Lycopodium Minerals Pty Ltd. Other discipline specific consultants were:
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| Mineral Resource Estimate: | Matrix Resource Consultants Pty Ltd. |
| Metallurgical Testwork: | SGS Lakefield |
| Metallurgical oversight: | MPH Minerals Consultancy Ltd. |
| Tailings and Water Storage: | Knight Piésold Pty Ltd. |
| Hydrogeology: | Australasian Groundwater & Environmental Consultants |
| Environment: | Mineesia Ltd. |
| Mineral Reserve Estimate & Mining: | Carci Mining Consultants Ltd |
Key Differences in Project Scope Compared to 2022 DFS
As part of the recent feasibility review and process, several areas of the Project were re-evaluated:
- The mine plan now incorporates the mining of the Koné South and Gbongogo Main pits simultaneously at the start of operations to maximise grade and economics during the payback period.
- The power will now be supplied via a grid connection. This change was made due to the lack of reliable LNG supplies in the country and the high cost of importing LNG.
Figure 3: Koné Gold Project Site Layout
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Mining
Mining operations will be carried out by a contractor on a unit cost per tonne basis utilising a mining fleet comprised of 90t rigid body haul trucks with suitably sized loading units at a rate of 39Mtpa at Koné and 15Mtpa at Gbongogo Main, respectively. The grade of the processed material in the first eight years is enhanced by using an elevated cut off grade to the plant and stockpiling the lower grade material for later processing.
Pit optimizations were completed based on slope angle recommendations from SRK Consulting:
- for Koné South 48° for oxide, 68° for transition and 68° for fresh rock; the overall slope angle inclusive of ramps and berms is approximately 55°.
- for Gbongogo Main 32° for oxide, 40° for transition, and from 43° to 55° for fresh rock, which is reduced in areas of unfavourable bedding to 35°; the overall slope angle inclusive of ramps and berms is approximately 43°.
The optimizations were run using estimates of processing cost and recovery data for each domain. Mining costs were broken into base and incremental mining costs, derived from competitive bids received from West African mining contractors.
A gold price of $1,550/oz was used for the optimisation along with the following royalty assumptions:
i) a sliding scale royalty payable to the government of Côte d’Ivoire, 4.0% at $1,550/oz Au; ii) a 2% property royalty; and iii) a 0.5% community development fund royalty.
Pit designs (Figure 4 and Figure 5) were completed for the Koné and Gbongogo Main deposits which will be exploited through three pits, a smaller Northern pit which reaches a depth of 70m, a larger Southern pit which extends to a depth of 495m, and the Gbongogo Main pit which extends to a depth of 220m.
The overall strip ratio of the Project is 1.18:1; the Koné South, Koné North and Gbongogo Main pits have strip ratios of 1:01, 1.19 and 3.77, respectively.
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Figure 4 – UFS Koné South Pit Design
Figure 5 – UFS Gbongogo Main Pit Design
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