"Once we have a large-scale, low-cost operation running, we do not need to find another million oz deposit: the value of smaller, higher-grade satellite deposits becomes immense for the overall cash flow."

Hugh Stuart

CEO, MONTAGE GOLD

June 07, 2022

Could you introduce the company?

Montage Gold was officially created in August 2019 as a spin-off from Orca Gold, a Canadian explorer/developer working in Sudan. We took over Orca’s assets in Ivory Coast and merged with Avant Minerals, a junior with projects in both Ivory Coast and Burkina Faso.

For the first two years, we wanted to understand the potential of the Koné deposit in Ivory Coast. We did background engineering and resource calculations, together with some serious step out drilling down to a vertical depth of 400 m. With a better understanding of the project, we decided to list on the TSXV. Our IPO was well supported, we raised US$35 million, which enabled us to accelerate our work. We turned the 1.5 million oz inferred resource we had in October 2020 into an inferred resource of 4.0 million oz by January 2021. Through infill drilling, we then converted this into a 4.3 million oz indicated resource for the Feasibility Study, and we published the DFS in February 2022.

What are some of the unique characteristics of the Koné deposit in Ivory Coast?

In many ways Koné is a classic shear zone hosted gold deposit, however it is uncommonly wide for this part of the world, exceeding 200 m width over the main part of the ore body compared to the region’s average of 10-50 m. While it has relatively low grade at 0.65 g/t Au, its width and the fact that it dips at 45 degrees, make Koné amenable to a very large-scale, low-cost operation with an easy-to-mine and easy-to-process ore body.

We opted for a large, 11 million tonnes processing plant, which allows us to realize economies of scale thus lowering the cut-off grade to 0.2-0.3 g/t and the strip ratio to less than 1. One of the key considerations in processing gold ore bodies is the hardness of the rock. Koné mineralization is hosted in soft rock that requires less energy for grinding thereby reducing costs.

Finally, the project is in open country with little habitation but close to villages, which means very little re-settlement is required and local workers can commute in and out of the site without depending on purpose-built accommodation. Taken together, these aspects prove that grade is not everything. 

Could you give us a sense of your district exploration strategy?

Once we have a large-scale, low-cost operation running, we do not need to find another million oz deposit: the value of smaller, higher-grade satellite deposits becomes immense for the overall cash flow. For instance, the Petit Yao Central target is located only 8 km east of Koné and has higher grades in the range of 2 g/t. While this would not make for a sizeable deposit on its own, it has the potential to become the first satellite deposit for Koné; adding 50,000-100,000 oz at higher grades makes a huge difference in project economics. Geologically, it is a lot easier to find 50,000 oz than 1 million oz, so we will focus on expanding our exploration permits to up to 1,400 km2 and finding more satellite deposits. District exploration can transform Koné from a solid operation into something quite spectacular.

What has determined Montage to opt for an LNG-solar hybrid power plant?

The West African energy landscape has drastically changed over the last six years, as natural gas was discovered offshore Ghana and Ivory Coast. Many of the mines in the region, including Perseus’ Edikan or Orezone’s Bomboré, are shifting to LNG. For us, it made sense to choose this for two reasons: First, LNG plus solar is a greener alternative to HFO or diesel, as well as being cheaper. Second, we are not connected to the main grid, unlike most miners in Ivory Coast. LNG pipelines are currently being tracked from Ghana into Burkina Faso and Ivory Coast, so I expect this will become a very popular energy alternative.

How do you find the investment appetite for greenfield gold projects?

As a relatively small company, securing large CAPEX is challenging, but there is a market appetite for gold projects. Koné is a robust project that can withstand significant debt, as well as lending itself to a quick payback under three years or less, helped by production of 300,000 oz/year in years two and three.

Given the currently low market valuations, the biggest challenge for small companies is the equity part of the financing, but given the scale of the project, the potential to improve it further, the possibility of alternative financing solutions, including streaming, I do not see it as insurmountable. The equity market has been quite disappointing, and we are trading at a discounted value compared to the IPO price, but we are well funded for our work programmes and so I see this as an opportunity more than anything else.

How do you see Ivory Coast growing as a mining jurisdiction? 

Ivory Coast is a popular destination and an easy place to be in. The mining sector will expand considerably because the ground is largely underexplored. The country has gone through political turmoil in the past, but it had relatively stable elections in 2020, and the economy has continued to expand. Also, Ivory Coast is not facing the security challenges seen in neighboring countries. Compared to other West African countries, the mining sector in Ivory Coast has plenty of room to grow, driven by several new gold projects currently reaching the feasibility and development phase.

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