Loulo-Gounkoto is located in Mali, 350 km west of the capital city of Bamako, adjacent to the Falémé River which demarcates the border with Senegal. The deposits are located in the Kedougou-Kenieba erosional inlier. Mineralization is typically found in narrow and steeply dipping veins hosted in a meta-sedimentary volcanic sequence. Loulo was discovered in 1981 by a joint venture between the Malian Direction Nationale de la Geologie et des Mines (DNGM) and the French Bureau de Recherches Geologiques et Mineres (BRGM). Through a series of purchases, Randgold, now Barrick, came to own 80% of the project, with the Republic of Mali retaining 20% ownership. Construction of the Loulo Mine began in 2004 and open pit mining commenced in 2005 followed by underground mining in 2008. The Gounkoto deposit was discovered in 2009 and open pit mining commenced in 2011. By 2016, annual gold production exceeded 700 koz. At the time of publication of the technical report, Loulo-Gounkoto had processed 70.9 Mt at a grade of 4.40 g/t with a recovery of 91.1%, producing 9.1 Moz gold.
Operations at Loulo-Gounkoto consists of open pit and underground operations. Surface mining consist of eight pits of varying characteristics with an aggregate strip ratio of 15. The pits are fairly small and due to high strip ratio, unit cost of open pit ore is relatively high. Underground mining is carried out in three mines, each accessed via twin declines, using longhole as the mining method of choice with paste backfill. The Complex is planned to have a combined throughput of 5 Mtpa, of which two thirds originate from underground, to produce over 700 koz per year on average until 2027. As underground winds down to 1.7 Mtpa, surface operations increases to compensate, with a combined throughput of 6.2 Mtpa to produce an average in excess of 500 koz per year. Surface operations wind down after 2033, with the underground operating until 2037. LOM average recovery is 89.5%. As a producing mine, Loulo-Gounkoto is under no obligation to disclose project economics. Mining Momentum has used the LOM plan and costs presented in the technical report to estimate a Pre-Tax Cashflow of US$2.6 B (US$2.1 B Barrick’s share) and US$1.7 B (US$1.3 B Barrick’s share) discounted 10% using the Reserve gold price of US$1,300/oz.
| Tonnes (Mt) | Grade (g/t) | Contained (Moz) | Barrick’s (Moz) | |
|---|---|---|---|---|
| Reserve | 67 | 3.87 | 8.3 | 6.7 |
| OP | 24 | 2.95 | 2.3 | 1.8 |
| UG | 35 | 4.98 | 5.6 | 4.5 |
| Stockpile | 8 | 1.77 | 0.5 | 0.4 |
| M+I | 25 | 3.41 | 3.1 | 2.5 |
| OP | 3 | 2.25 | 0.3 | 0.3 |
| UG | 22 | 3.84 | 2.7 | 2.2 |
| Inferred | 28 | 2.60 | 2.3 | 1.8 |
At first glance, Loulo-Gounkoto is a solid Tier 1 operation. Upon closer inspection however, its >500 koz per annum production is in fact, sourced from a series of smaller mines. Up to 2027, prospects are excellent, with the underground supplying ~3.5 Mtpa at ~5 g/t and open pits supplying ~1.3 Mtpa at ~3.6 g/t. Challenges emerge as underground mining reduces to 1.7 Mtpa and grades fall to 4 g/t. Open pits are sensitive to grade here due to high strip ratio, restricting surface operations to high grade ore. To compensate for reduced underground mining, open pit ramps up after 2028, despite mining at a reduced grade of <2 g/t. Reduced margins are evidenced by AISC of $767/oz up to 2028, rising to $992/oz with increased open pit mining until 2032, then reducing to $986/oz with reduced scale underground only operations until end of mine life in 2037. Based on project economics outlined in the technical report, mining from 2029 to 2037 shows little financial gain. While >500 koz production is stretched to 2032, it demands an outsized amount of effort and requires a complex balancing act in mine planning, with questionable profitability. Mining Momentum sees potential however. The LOM is based on current Reserve. Loulo-Gounkoto has a huge M+I Resource of 25 Mt and Inferred Resource of 28 Mt and the deposit is open at depth.
When considering Resource conversion, Mining Momentum has excluded open pit Resources since the deposits are sensitive to strip ratio and it is unknown whether pit limits are governed by surface infrastructure. Any additional metal may be considered as pit design upside opportunities. Mining Momentum thus opts to focus on the underground portion of Resources, 22 Mt M+I at 3.84 g/t and 19.6 Mt Inferred at 2.9 g/t. Mining Momentum estimates this to amount to an additional 14.5 years worth of mining at 1.8 Mtpa, adding 200 koz per year. Mining Momentum estimates underground production to average over 450 koz per year. This also enables open pits to continue operating at its current throughput to produce over 120 koz per year. Mining Momentum expects Loulo-Gounkoto to maintain over 550 koz per year to the end of the 2030s. While there are uncertainties in the mine plan beyond 2028, due to its massive underground Resource, Mining Momentum is confident in continued Resource conversion to enable Loulo-Gounkoto to continue producing close to 600 koz per year for at least a decade and half, not to mention additional exploration potential. Truly a world class deposit!
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective December 31, 2022 (INSERT), with commentary from the author. Statements above do not represent the views of Barrick Gold. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.