TIDMAAAM
RNS Number : 8915X
African Aura Mining Inc.
14 December 2010
NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION
TO US NEWS WIRE SERVICES.
14 December 2010
TSX-V: AUR
AIM: AAAM
PRELIMINARY ECONOMIC ASSESSMENT ON NEW LIBERTY GOLD PROJECT
African Aura Mining Inc. ("African Aura" or the "Company"), the
TSX--V (AUR) and AIM (AAAM) listed exploration and development
company is pleased to announce the completion of the preliminary
economic assessment study (the 'Study') with respect to the
Company's 100% owned New Liberty Gold Project located in western
Liberia.
-- Study highlights potential for robust open pit gold mine with
strong economics
-- First five year's production with minimum 100,000oz pa in
initial 8.5 year mine life
-- Pre-tax NPV of $234m (GBP148m) based on $1,100/oz Au and 10%
discount rate
-- Initial capex of $92m, average cash cost of $484/oz and head
grade of 3.6 g/t Au
-- IRR of 73% and capital payback in under two years
-- Definitive Feasibility Study underway and on track for 4Q
2011 completion
Luis da Silva, Chief Executive of African Aura, commented:
"These very positive results demonstrate the robust nature of
the New Liberty Gold Project and confirm our long held belief on
the excellent grade potential of the ore zone for the open pit
mine. It is worth highlighting that the pre-tax NPV of the project
calculated using a gold price of $1,100/oz and 10% discount of
$234m / GBP148m equates to approximately GBP1.62 / $2.56 per
African Aura common share on a fully diluted basis. New Liberty
will be an excellent flagship gold asset for Aureus Mining Inc
which, subject to the necessary shareholder and regulatory
approvals, is anticipated to be created by March 2011 by way of the
corporate restructuring as detailed in the Company's news release
of 8th November 2010.
In the meantime we shall complete further infill and exploration
drilling in the process of finalising the definitive feasibility
study. New Liberty is on the cusp of becoming a very significant
gold operation in West Africa and we will update shareholders in
due course. Over the last five years, the current administration
under President Ellen Johnson Sirleaf has brought about a
monumental change in investor sentiment culminating in stated
foreign direct investment of approximately $16 billion, mainly in
mining, oil and agriculture. Indeed New Liberty will be the first
operating gold mine in Liberia and I would like to acknowledge the
cooperation and support of the Government of Liberia."
The study supports an open pit and gold processing plant with an
average annual production rate of 850,000 tonnes of ore over an 8.5
year production life. In the first 5 years of the project, forecast
gold production will average 100,000 ounces per year with total
gold production for the project expected to be some 786,700 ounces.
Metallurgical testwork has confirmed the ore is non-refractory and
a recovery of 93% is achievable through a combined gravity and
carbon in leach process.
The average life of mine cash cost per ounce is estimated at
$484 with an expected pre-tax net present value ('NPV') of $234
million at a gold price of $1,100/oz using a 10% discount rate and
a pre-tax internal rate of return ('IRR') of 73%. The expected
payback period is less than 2 years. For all estimates 4Q 2010
market prices for capital and operating costs were applied. All
dollar amounts presented in this news release are expressed in US
dollars. Based on the results of the study, the New Liberty deposit
contains 7.3 million tonnes of mineable gold ore in the Indicated
and Inferred category at a diluted head grade of 3.6 g/t. The
majority of the mineable resource is in the Indicated category.
The Study was compiled by AMC Consultants (UK) Limited ('AMC')
in collaboration with MDM Engineering Ltd, Golder Associates Africa
Ltd and the African Aura Project Development team. The study is
based on the Indicated and Inferred resources as stated in the
National Instrument 43-101 of the Canadian Securities
Administrators ("NI-43-101") compliant technical report dated
November 2010 and entitled 'New Liberty Gold Project, Liberia, West
Africa, Technical Report on Additional Drilling and Estimated
Resources for African Aura Mining Incorporated' prepared by Mr C G
Arnold of AMC Consultants (UK) Limited (the 'November 2010
Technical Report').
Economic Highlights
Economic highlights of the Study are detailed in the table
below, and are on a 100% project basis, excluding debt finance:
Key Data
Ore Milled Mt 7.3
---------------------- -------- --------
Mined Head Grade g/t 3.6
---------------------- -------- --------
Total Gold Produced Ounces 786,700
---------------------- -------- --------
Process Recovery % 93
---------------------- -------- --------
Mine Life Years 8.5
---------------------- -------- --------
Waste Mt 137.9
---------------------- -------- --------
Stripping Ratio 18.9
-------------------------------- --------
Gold price US$/oz 1100
---------------------- -------- --------
Gross Revenue US$M 865
---------------------- -------- --------
Net Smelter Return US$M 837
---------------------- -------- --------
Operating costs US$M 352
---------------------- -------- --------
Operating Cash flow US$M 485
---------------------- -------- --------
NPV pre-tax @10% US$M 234
---------------------- -------- --------
IRR pre tax % 73
---------------------- -------- --------
Pay-back period Years 1.5-2.0
---------------------- -------- --------
Operating cash cost US$/oz 484
---------------------- -------- --------
Initial Capital Cost US$M 92
---------------------- -------- --------
Sustaining & Closure
Capital Cost US$M 6
---------------------- -------- --------
Sensitivity analysis
Gold price US$/oz 900 1000 1200
------------------ -------- ---- ----- -----
NPV pre-tax @10% US$M 132 183 285
------------------ -------- ---- ----- -----
IRR pre tax % 49 61 85
------------------ -------- ---- ----- -----
The total capital cost of $98m for the project includes
processing plant power supply, other mine infrastructure, tailings
dam construction, creek diversion, sustaining capital and mine
closure. The pit optimization work assumes that the mining
operation will be outsourced to a suitable mining contractor. An
analysis of project sensitivities highlights that the operation is
least sensitive to capital cost increases. The company considers
the project to be robust as the breakeven gold price is
approximately $640 per ounce, inclusive of capital cost repayments
and depreciation.
Based on the positive results of the Study, the Company plans to
advance the New Liberty Project through to the definitive
feasibility study stage by the end of 2011. In that regard, a
project environmental and social impact assessment scoping study
was started by Golders Associates Africa Ltd in August 2010 and the
final study is due within the DFS period in 2011. The Company is
planning a resource infill drilling programme to convert indicated
resources to the measured category and inferred resources to the
indicated category during the first 6 months of 2011. Inter alia,
further metallurgical samples will be obtained for testing to
update the mill comminution and recovery test work previously
completed by SGS Lakefield of Canada, and Mintek of South Africa.
The work will be aimed at providing final design parameters for the
grinding circuit together with investigations to improve recovery
performance and optimise reagent additions.
The New Liberty project is a greenfield development with the
advantage of having excellent access from the capital and main port
of Liberia, Monrovia. From the capital there is predominantly paved
road covering the 85 kilometres to the project site, providing all
year round access.
Updated Resource
The resource estimate was undertaken by AMC Consultants (UK)
Limited ('AMC') in accordance with the requirements of National
Instrument 43-101 "Standards of Disclosure for Mineral Project", of
the Canadian Securities Administrators ("NI-43-101"). It
incorporates all the results from drilling as at 14 September 2010,
being 175 holes for 27,736 meters and was calculated on the basis
of a 1.0 g/t cut-off grade.
Resource categories
The total resource estimate of 1.51 million ounces of gold
grading 3.78 g/t is comprised of 5,599,000 tonnes grading 4.17 g/t
(for 751,000 ounces) in the indicated category and 7,040,000 tonnes
grading 3.40 g/t (for 762,000 ounces) in the inferred category, as
detailed in Table 1 below. The indicated resource has been
projected to an approximate depth of 200 metres below surface. The
inferred resource remains open down dip and open along strike.
Table 1. New Liberty NI 43-101 Mineral Resources
Zone Indicated Inferred
-------- ----------------------- -----------------------
Tonnes Tonnes
(Kt) Au (Kt) Au
-------- ------- -------------- ------- --------------
(g/t) (KOz) (g/t) (KOz)
-------- ------- ------ ------ ------- ------ ------
Larjor 1,637 4.37 230 2,109 3.50 234
-------- ------- ------ ------ ------- ------ ------
Latiff 1,080 5.03 175 380 4.20 51
-------- ------- ------ ------ ------- ------ ------
Kinjor 1,449 4.26 198 2,310 3.80 280
-------- ------- ------ ------ ------- ------ ------
Marvoe 1,433 3.21 148 2,230 2.80 198
-------- ------- ------ ------ ------- ------ ------
Total 5,599 4.17 751 7,040 3.40 762
-------- ------- ------ ------ ------- ------ ------
Notes:
1. The four zones are each within 100m of the next zone and
comprise sections of the same deposit. The total strike length of
the four zones is 1.75km.
2. CIM definitions were used for Mineral Resources
3. A cut off of 1.0 g/t Au is applied for all zones
4. Due to rounding, some columns or rows may not add up exactly
to the computed totals
About the New Liberty Mining Licence Area
The New Liberty gold deposit is a classic Archaean shear zone
hosted greenstone gold deposit with a strike length of 1.75km,
located in western Liberia. The project is open ended on strike and
exploration work is being targeted to extend the near surface
resources.
New Liberty is one of a series of gold deposits, including the
Ndablama and Weaju prospects, located within the Company's 457km2
'Class A' 25 year renewable Mining Licence. Geologically, Archaean
greenstone belts are known to host major gold mines in Canada,
Australia, the Democratic Republic of the Congo and Tanzania. The
Company considers that the Archaean geology of the Man Craton of
west Africa is one of very few provinces globally that is highly
prospective, but has yet to be systematically explored.
Technical Report
The entire Study will be available within seven days at
www.sedar.com and on the Company's corporate website
www.african-aura.com.
Note: The Study is preliminary in nature and the mineral
resource estimates referred to within the Study include the use of
Indicated Resources. The Company is completing its infill drilling
programme and additional study to convert resources in to the
Measured category.
Qualified Person
The Study was prepared by Mr M Staples of AMC Mining Consultants
(UK) Ltd, a Qualified Person, for the purposes of the study, under
the standards set forth by NI 43-101, and he has also reviewed and
approved the contents of this news release, as applicable.
About African Aura Mining Inc.
African Aura is an established exploration and development
company listed on the TSX-V (AUR) and London's AIM (AAAM). The
Company operates two divisions, namely: iron ore and gold:
- The iron ore division includes its 38.5% interest in the Putu
iron ore project in Liberia, which is moving through
pre-feasibility managed by joint venture partner Severstal
Resources (the mining division of Moscow listed OAO Severstal). In
September 2010 Putu was granted a 25 year renewable Mineral
Development Agreement by the Government of Liberia. The division
also includes a 100% interest in the Nkout iron ore project and
surrounding iron targets in Cameroon which is subject to a resource
definition drilling programme.
- The gold division includes the multi million ounce potential
New Liberty greenstone gold deposit, which is being advanced
through a definitive feasibility study, and the proximal Ndablama,
Weaju, Silver Hills and Gondoja gold projects all within the
Company's Bea Mountain 25 year renewable Mineral Development
Agreement.
In addition, the Company has a 22% interest in AIM-listed
diamond producer Stellar Diamonds Plc (AIM: STEL,
www.stellar-diamonds.com).
The Company has a highly motivated and experienced team with a
track record of discovering mines and taking projects through
development and into production. As a pioneer, African Aura has
attracted some excellent strategic partners and shareholders,
always with the objective of preserving or enhancing shareholder
value. For further information on the Company you are invited to
visit its website at www.african-aura.com or SEDAR's website at
www.sedar.com, or contact one of the following:
African Aura Mining Inc.
Luis da Silva, President & CEO Tel: +44 (0) 20 7257 2930
Evolution Securities Limited
Simon Edwards / Tim Redfern Tel: +44 (0) 20 7071 4300
Pelham Bell Pottinger
Charles Vivian / James MacFarlane Tel: +44 (0) 20 7861 3232
Forward-looking Statements
This press release includes certain forward-looking statements.
All statements, other than statements of historical fact, included
herein, including without limitation, statements regarding the
future plans and objectives of African Aura, are forward-looking
statements that involve various known and unknown risks and
uncertainties as well as other factors. Such forward-looking
statements are subject to a number of risks and uncertainties that
may cause actual results or events to differ materially from
current expectations, including delays in obtaining or failure to
obtain required regulatory approvals. There can be no assurance
that such statements will prove to be accurate and actual results
and future events could differ materially from those anticipated in
such statements. Any forward-looking statements speak only as of
the date hereof and, except as may be required by applicable law,
African Aura disclaim any obligation to update or modify such
forward-looking statements, either as a result of new information,
future events or for any other reason.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accept responsibility for the adequacy or
accuracy of this release.
Ends
This information is provided by RNS
The company news service from the London Stock Exchange
END
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