TAIA Lion Resources, Sierra Leone's leading gold and precious metals exploration company, is well positioned to weather the increasingly difficult capital market situation currently embracing exploration stage mining companies.
In Sierra Leone, TAIA's Lake Sonfon and Gori Hills gold projects (subject to positive feasibility studies) will be low cost open pit projects. Traditionally, low gold prices benefit the open pit gold mining sector and with some recent uncertainty surrounding the gold price, where the price broke through the $1,600 per ounce price floor recently, TAIA is well positioned to offer investors a low risk profile when it comes to taking what is already a decent set of drill results from its projects, through to realising mine development.
Typically a plant capable of treating bulk low grade gold feed can be built for circa 75 million US$.
Set this against an underground gold-copper mine, where the capital expenditure can exceed 1 billion US$. Cash cost per ounce typically for gold recovered from an open pit operation, where grades average around 3 grammes per tonne can fall between $400 to $600 per ounce. Cash cost per ounce for underground mines often fall above $1,000 per ounce.
Should gold track lower, then the ability to bring into production, underground "marginal" projects will be extremely limited. With project finance becoming even more difficult to secure, a lower gold price could render a number of gold projects redundant. This could actually hinder supply and may serve to drive gold prices higher. At what point the inflection between supply, demand and price works to adjust back into driving the price of gold up, is difficult to predict. But if the gold price remains below $1,400
and uncertainty surrounds the market, then even gold-copper mines with good prospects, may struggle to secure development finance. Given the fact older mines, with high cash per once production costs, need ongoing development finance, many may find that financing continuing production could prove difficult.
Accordingly, TAIA with promising drill results from its gold projects to date, strong corporate responsibility profile in Sierra Leone, favourable on the ground conditions and low cost, low risk exploration to production profile, is positioned better than most to make their operations in Sierra Leone a great success.
