Sumitomo resumes production at Ambatovy, withdraws nickel output outlook
Sumitomo has been struggling to stabilise production and improve profitability at the Madagascar project, which launched in 2005.
Shares in Compass Gold (TSXV: CVB) doubled on Tuesday after Malian business group SMAT agreed to toll-treat ore from its Tarabala deposit within five months, as the company awaits its mine permit.
Mali’s mining code allows Compass to mine up to 200,000 tonnes of ore a year in the country’s south and produce as much as 160,000 oz. of metal over the next four years. Free cash flow from operations will support debt repayment, fund operating expenses, and advance exploration along the 15 km Tarabala trend, part of its Sikasso property, the company said in a release.
CEO Larry Phillips said the agreement puts Compass on the path to generating cash flow quickly while taking advantage of high gold prices.
“This initial joint-production arrangement represents an important step toward achieving near-term production with minimal capital investment,” Phillips said in a release. “We firmly believe the accelerated timeline afforded by this arrangement is especially important, given the historically high gold price to be realized through the production and sale of gold in the coming year.”
Compass shares hit a 12-month high in Toronto on Tuesday at C$0.22 apiece, having traded at a low of C$0.11. It has a market capitalization of C$15 million.
The agreement allows Compass to process 50 tonnes of ore per hour at the SMAT facility using new processing equipment scheduled for installation by early next year. The plant is just 3 km from its Massala prospect, where the Tarabala trend is found, and south of the capital Bamako.
Recent trenching at Massala returned gold assays above 1 gram gold per tonne, according to a release on Aug. 19. That’s above the minimum threshold for small-mine profitability, the company said.
The prospecting found strong gold near the surface. Assays confirmed a minable strike length of 150 metres.
The best results from the 5-metre-deep trenches included 21 metres at 3.51 grams gold per tonne. A high-grade interval was 1 metre at 40.29 grams gold. Compass said these results support its push for a small mine permit under Mali’s mining code, for which the Toronto-based company applied on Aug. 19.
It also seeks to renew its larger Sikasso property exploration permit, which spans 1,173 sq. km.
Phillips says he’s confident in the project timeline, expecting receipt of the mining permit early in the new year to coincide with plant readiness.
“We are close to pouring our first gold.”
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