CHESSER R 15 March 2022
ASX Announcement
CHESSER'S SCOPING STUDY CONFIRMS ROBUST LOW-COST GOLD
only PROJECT AT DIAMBA SUD, SENEGAL
Chesser Resources Limited ("Chesser" or "the Company") (ASX:CHZ) is pleased to report on the results of the Scoping Study undertaken over the Area A and Area D Mineral Resources at the Diamba Sud Gold Project ("Project") in Senegal, West Africa.
STUDY HIGHLIGHTS1
• Pre-taxNPV5 A$560M (US$402M) and IRR 69% at a US$1,800/oz gold price use• Post-taxNPV5 A$419M (US$301M) and IRR 59% at a US$1,800/oz gold price
• Payback 1.25 years from commercial production
• 7.5-year Project life producing 704koz gold at an average AISC of US$820/oz
• First two years of gold production totals 244koz at an average AISC of US$545/oz
• Total Project mining inventory of 14.7Mt at an average grade of 1.6g/t gold (70% from
Indicated Resources) containing 750koz of gold at a strip ratio of 2.8
personal• Ore mined and processed in first two years of operations @ an average grade of 2.0g/t gold (83% from Indicated Resources) containing 257koz of gold at a strip ratio of 1.9
• Pre-production capital cost of US$159M including US$23M contingency
• Industry standard 2Mtpa CIL processing circuit with average gold recoveries of 94%
• Significant Resource upside - Areas A and D remain open and new discovery at Area H
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• Diamba Sud represents a potential long life, technically simple, low risk and highly profitable mining operation that will generate significant benefits to all stakeholders
The Scoping Study results clearly demonstrate the very significant potential value from a future mine development at Diamba Sud. Importantly the study does not include any potential Mineral Resources from the new discovery at Area H (Karakara) or any further resource Foradditions that might result from the current 15,000m to 20,000m drilling program all of which
would further enhance the value of the Diamba Sud Project
Chesser MD and CEO Andrew Grove commented: "These excellent Scoping Study results clearly demonstrate that there is a low risk and very robust potential future gold mine at Diamba Sud. The Project economics are expected to improve with future growth in Mineral Resources associated with the current drilling campaign which is focussed on defining the new discovery at Karakara and extending the resources at Areas A and D, as well as exploration leading to new discoveries. Relative to the Company's current market capitalisation of ~A$50m, the Scoping Study NPV of approximately A$560m and resource growth potential at the Project highlights the potential for significant future value creation for Chesser shareholders."
1 All Scoping Study results are approximate. Cost estimates are subject to Scoping Study level of accuracy of +/- 35%.
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15 March 2022
ASX Announcement
Cautionary Statement
The Scoping Study referred to in this ASX release has been undertaken for the purpose of initial evaluation of a potential development of the Diamba Sud Gold Project, Senegal. It is a preliminary technical and economic study of the potentialviability of the Diamba Sud Gold Project. The Scoping Study outcomes, production target and forecast financial information referred to in this release are based on low accuracy level technical and economic assessments that are insufficient to support estimation of Ore Reserves. The Scoping Study has been completed to a level of accuracy of +/- 35% in line with a scoping level study accuracy. While each of the modifying factors was considered and applied, there is no certainty of eventual conversion of Mineral Resources to Ore Reserves or that the production target itself will be realised. Further exploration and evaluation work and appropriate studies are required before any Ore Reserves or assurance of an economic development case. Given the uncertainties involved, investors should not make any investment decisions based solely onthe results of the Scoping Study.
For personal use
Of the Mineral Resources scheduled for extraction in the Scoping Study production plan approximately 70.3% are classified as Indicated and 29.7% as Inferred. There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realised. Inferred Resources comprise 22% of the production schedule in the first two years of operation and the payback period which is 1.25 years. Chesser confirms that the financial viability of the Diamba Sud Gold Project is not dependent on the inclusion of Inferred Resources in the production schedule.
The Mineral Resources underpinning the production target in the Scoping Study have been prepared by a competent person in accordance with the requirements of the JORC Code (2012). The Competent Person's Statement is found in this ASX release. For full details of the Mineral Resources estimate, please refer to Chesser's ASX release dated 16 November 2021. The Competent Person's Statement is found in this ASX release. Chesser confirms that it is not aware of any new information or data that materially affects the information included in that release. All material assumptions and technical parameters underpinning the estimates in that ASX release continue to apply and have not materially changed.
This release contains a series of forward-looking statements. Generally, the words "expect," "potential", "intend," "estimate," "will" and similar expressions identify forward-lookingstatements. By their very nature forward-lookingstatements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, to differ materially from those expressed or implied in any of our forward-lookingstatements, which are notguarantees of future performance. Statements in this release regarding Chesser's business or proposed business, which are not historical facts, are forward-looking statements that involve risks and uncertainties, such as Mineral Resource estimates, market prices of gold, capital and operating costs, changes in project parameters as plans continue to be evaluated, continued availability of capital and financing and general economic, market or business conditions, and statements thatdescribe Chesser's future plans, objectives or goals, including words to the effect that Chesser or management expects a stated condition or result to occur. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by Chesser, are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made.
Chesser has concluded that it has a reasonable basis for providing these forward-looking statements and the forecast financial information included in this release. This includes a reasonable basis to expect that it will be able to fund the development of the Diamba Sud Gold Project upon successful delivery of key development milestones and when required.The detailed reasons for these conclusions are outlined throughout this ASX release and Section 18 in Attachment 1 Scoping Study report. While Chesser considers all of the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.
To achieve the potential mine development outcomes indicated in the Scoping Study, funding in the order of US$180 million will likely be required. Investors should note that there is no certainty that the Company will be able to raise funding when needed, however the Company has concluded that it has a reasonable basis for providing the forward-looking statements included in this announcement and believes that it has a "reasonable basis" to expect it will be able to fund the development of the Project.
No Ore Reserve has been declared. This ASX release has been prepared in compliance with the current JORC Code (2012) and the ASX Listing Rules. All material assumptions, including sufficient progression of all JORC modifying factors, on which the production target and forecast financial information are based have been included in this ASX release.
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15 March 2022
ASX Announcement
onlyCONFERENCE CALL
Managing Director, Andrew Grove, will host a conference call to discuss the Scoping Study at 11:00AM Australian Eastern Daylight Time ("AEDT")/ 8:00AM Australian Western Standard Time ("AWST") on Wednesday 16 March 2022.
Participants will be able to access the webinar approximately five minutes before the start of the event, using the link below:
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https://zoom.us/j/99568872552 | ||
Meeting ID: 995 6887 2552 | ||
Dial by your location | ||
+61 8 6119 3900 | Australia (Perth) | |
personalFor | +61 8 7150 1149 | Australia (Adelaide) |
+61 2 8015 6011 | Australia (Sydney) | |
+61 3 7018 2005 | Australia (Melbourne) | |
+61 7 3185 3730 | Australia (Brisbane) |
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15 March 2022
ASX Announcement
INTRODUCTION
onlyThis Scoping Study details the potential for an open pit mining operation and gold processing plant at Chesser's Diamba Sud gold project in Eastern Senegal.
Diamba Sud is located within the highly prospective Senegal Mali Shear Zone which hosts numerous world-class gold mines including Barrick's 12.5Moz Loulo mine and its 5.5Moz Gounkoto mine, both located within 12km and 7km of Diamba Sud respectively.
The Project is located within the 53.2km2 Diamba Sud permis de recherche (exploration uselicense) which is 100% owned by Boya SAU a wholly owned Senegalese subsidiary of Chesser.
The Senegalese government is entitled to a 10% free carried interest in the project upon granting of the exploitation permis (mining license).
Site is accessed from the sealed N24 highway which runs within a few kilometres of the Project and connects Dakar, the capital and main port of Senegal to Mali. The nearest community, Gamba, is located 5km west of the project site.
personalThe Scoping Study is based on the 781koz gold maiden Mineral Resource inventory covering
Area A and Area D, released to the market on the 16 November 2021, summarised in Table 1. Resources do not include mineralisation from the new discover at Area H (Karakara), located 1.2km from the Area D pit, Figure 4.
Table 1: Maiden Mineral Resource- Diamba Sud1
Oxidation
Oxide
Fresh
Total
A standard 2Mtpa CIL SAG/Ball circuit gold processing plant was considered to be appropriate for the Scoping Study. Tailings from the CIL will undergo cyanide detox and report to a tailings Forstorage facility. Raw water for processing will be sourced by seasonal pumping from the
Falémé River, approximately 7km to the east, to a water storage dam.
Mining from three open pits (Area D, Area A and Area D South) is assumed to be undertaken by a mining contractor utilising standard truck and shovel open pit mining methods.
The project will include an on-site accommodation village housing part of the workforce, with the balance residing in adjacent communities. Power will be generated on site.
1 Refer to ASX announcement dated 16 November 2021 for details of the Mineral Resource Estimates which includes a Competent Person statement prepared in accordance with the requirements of the JORC Code (2012). The Company is not aware of any new information or data that materially affects the information
included in the referenced ASX announcement and confirms that all material assumptions and technical parameters underpinning the estimates in the market announcement continue to apply and have not materially changed.
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15 March 2022
ASX Announcement
The cash flow and economic analysis has been prepared on a 100% of project, constant first onlyquarter calendar 2022 US dollar basis. Cost estimations are considered to be at a scoping
study level of accuracy of +/-35%.
The Scoping Study inputs were compiled from reports prepared by external consultants and certain estimates generated by Chesser (Table 2) and assessed to be at a scoping level of accuracy.
The Scoping Study report can be found in Attachment 1 and the JORC Tables in Attachment 2 of this release.
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Table 2: Scoping Study Contributions | |
STUDY INPUTS | |
Study Compilation | Chesser |
Geology | Chesser |
Resource Estimation | Dr. John Arthur (CGeol, FGS) |
Geotechnical | Peter O'Bryan & Associates |
Mining Design and Scheduling | Cube Consulting |
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Mine Operating Costs | Majesso Consulting Pty Ltd |
Metallurgy Testwork | ALS, Lycopodium Limited, JK Tech, IMO and Mintrex |
Process Engineering and Design | Mintrex |
Operating Costs | Mintrex |
Infrastructure | Mintrex |
Capital Costs | Mintrex |
Environmental, Social and Licensing | Chesser, Earth Systems SARL and ESS |
Tax and Fiscal terms | Chesser and Senegalese Legal input |
Financial Modelling | Infinity Corporate Finance, Orimco and Chesser |
Figure 1: Diamba Sud project aerial photo, looking east
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Chesser Resources Limited published this content on 14 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 March 2022 21:38:40 UTC.
