TIDMAMA
RNS Number : 1251N
Amara Mining PLC
14 May 2015
14 May 2015 AIM:AMA
Amara Mining plc
(together with its subsidiaries, "Amara" or the "Group")
PRE-FEASIBILITY STUDY FOR YAOURE GOLD PROJECT CONFIRMS ROBUST
FINANCIAL RETURNS
Drilling recommenced to progress project towards BFS
Amara is pleased to announce the results of the National
Instrument ("NI") 43-101 compliant Pre-Feasibility Study ("PFS")
for its 100% owned Yaoure Gold Project ("Yaoure") in Côte
d'Ivoire.
HIGHLIGHTS
-- PFS confirms that Yaoure is an outstanding gold development
project, increasing confidence in the deposit and reducing risk
-- Maiden Mineral Reserve reported of 2.7Moz (70.4Mt at 1.18g/t)
within a pit design, which has been based on an optimal US$975 per
ounce pit shell
-- Further upside is demonstrated in a scenario based on PFS
parameters, but including Inferred Mineral Resources ("MII
scenario")(1) - results are largely in line with Preliminary
Economic Assessment ("PEA") of March 2014
-- 6,000m drilling programme has commenced to upgrade a portion
of the remaining Inferred Mineral Resources to the Indicated
category
-- Several optimisation opportunities to further improve
Yaoure's strong economics under investigation, including the
potential to improve head grade through selective mining of the
higher grade CMA zone
Key Parameters Unit PFS (Indicated MII Scenario
resources
only)
------------------------------- -------- --------------- ------------
Post-tax IRR at US$1,250/oz % 23 33
------------------------------- -------- --------------- ------------
Post-tax NPV(8%) at
US$1,250/oz US$m 286 513
------------------------------- -------- --------------- ------------
Average annual production
in years 1-4 oz 291,000 323,000
------------------------------- -------- --------------- ------------
Average annual production
over life of mine ("LOM") oz 218,000 247,000
------------------------------- -------- --------------- ------------
LOM average total cash
costs (including royalties
and refining) US$/oz 739 608
------------------------------- -------- --------------- ------------
LOM average all-in sustaining
costs US$/oz 782 648
------------------------------- -------- --------------- ------------
Total pre-production
capital cost US$m 447 447
------------------------------- -------- --------------- ------------
Total capital payback
period Years 3.0 2.3
------------------------------- -------- --------------- ------------
John McGloin, Chairman and Chief Executive Officer of Amara,
commented:
"Delivering a PFS for Yaoure is an important milestone in the
project's advancement and the results confirm it is a robust
project with the potential to generate strong financial returns.
The PFS is just a snapshot on Yaoure's path to development and it
does not represent the final project we are going to build, which
is why we have also announced details of the MII Scenario
today.
"We recommenced drilling at Yaoure in April 2015 with the
objective of upgrading further Inferred resources to the higher
confidence Indicated category. This will allow us to deliver a NI
43-101 compliant BFS closer to the original PEA, which unlocks
Yaoure's full value. The results generated from this MII scenario
reconfirm our belief that Yaoure has the potential to be one of the
top gold mines in Africa, with annual production of 247,000 ounces
over a 10 year LOM, and operating costs amongst the lowest on the
continent, with all-in sustaining costs of US$648 per ounce.
"Importantly, the results of this MII Scenario also identify
Yaoure as one of the few projects that remains strongly viable at a
gold price of US$1,100 per ounce, breaking even at around US$800
per ounce. Further optimisation studies are already underway, not
least the opportunity to improve the overall head grade through the
selective mining of the CMA zone.
"We have clearly demonstrated that Yaoure should be advanced to
a BFS and there remains significant exploration upside potential
beyond the current 6.8 million ounce Mineral Resource. With funding
secured to undertake further drilling and to deliver a BFS, I look
forward to updating the market on Yaoure's progress over the coming
months."
Steve Hill, Senior Project Manager of Tetra Tech, Inc., the
independent consultant responsible for the PFS, commented:
"The Yaoure Gold Project has been developed as a robust,
conventional, open pit and CIP project with strong potential for
further optimisation. It is designed to deliver bulk mining, large
scale production over a mine life in excess of 10 years. Its
processing costs are particularly attractive compared to other West
African projects due to Yaoure's location, which offers low cost
power and abundant water. Prior to completing the BFS, Tetra Tech
looks forward to involvement in a number of optimisation studies to
assist Amara in determining the best long-term strategy for
developing one of Africa's next major gold mines."
Notes
1. Amara is solely responsible for the MII scenario, it is not
NI 43-101 compliant solely due to the inclusion of Inferred
Resources in the economic analysis. It is calculated using the
majority of the same assumptions as used for the PFS, including a
6.5Mtpa processing plant, capital costs, mining costs and
processing costs.
Group Analyst Briefing and Conference Call
The management team will host a briefing for analysts at Amara's
offices (29-30 Cornhill, London, EC3V 3NF) at 9:30am UK time today.
Members of the Tetra Tech, Inc. team will be available after the
meeting to answer questions. There will be a simultaneous
conference call and dial-in details are as follows:
Dial in number (UK toll free) 0808 237 0030
Alternative dial in number: +44 (0)203 139 4830
Participant PIN Code: 76100909#
A presentation to accompany the conference call is available at
www.amaramining.com and playback of the conference call will be
available at http://www.amaramining.com/Investor-Relations/Webcasts
shortly after the conclusion of the call.
For more information please contact:
Amara Mining plc
John McGloin, Chairman & Chief Executive
Officer
Pete Gardner, Finance Director
Katharine Sutton, Head of Investor +44 (0)20 7398
Relations 1420
Peel Hunt LLP
(Nominated Adviser & Joint Broker)
Matthew Armitt +44 (0)20 7418
Ross Allister 8900
GMP Securities Europe LLP
(Joint Broker)
Richard Greenfield +44 (0)20 7647
Alex Carse 2800
Farm Street Communications
(Media Relations) +44 (0)7593
Simon Robinson 340 107
About Amara Mining plc
Amara is a gold explorer/developer with assets in West Africa.
The Group is focused on unlocking the value in its development
projects. At Yaoure in Côte d'Ivoire, this will be done by
increasing the confidence in the existing Mineral Resource and
economics at the project as Amara progresses it through to Bankable
Feasibility Study. At Baomahun, this will be achieved by gaining an
improved understanding of the exploration upside potential and
underground opportunity. With its experience of bringing new mines
into production, Amara aims to further increase its production
profile with highly prospective opportunities across both
assets.
BACKGROUND TO PFS AND MII SCENARIO
Mineral Reserve Statement
The Mineral Reserve estimate is based on the Mineral Resources
defined in the NI 43-101 compliant technical report entitled
"Yaoure Gold Project, Côte d'Ivoire, Technical Report and Mineral
Resource Estimates for Amara Mining Côte d'Ivoire SARL" with an
effective date of 5 January 2015. The Mineral Reserves are the
portion of the Mineral Resources that fall within a pit design,
which was based on an optimised pit shell corresponding to a gold
price of US$975 per ounce. The reported Mineral Reserve estimate is
shown in the following table:
Category Tonnes (Kt) Grade (g/t) Content (Koz)
---------- ------------ ------------ --------------
Probable 70,432 1.18 2,663
---------- ------------ ------------ --------------
Notes to Mineral Reserve table
1. Canadian Institute of Mining and Metallurgy and Petroleum
("CIM") definitions were used for Mineral Reserves
2. The Mineral Reserve was estimated by the contents of a
resource block model within a pit design. This design was based on
an optimisation, in which only indicated Resources were enabled.
The optimised shell selected corresponded to a gold price of
US$975/oz
3. The Mineral Reserve is reported at a cut-off grade of 0.33
g/t Au. This cut-off has been derived from the breakeven level
corresponding to a gold price of US$1,250/oz
4. A mining loss factor of 10% has been applied. Dilution has
already been applied in the generation of bulk mining blocks in the
resource model, measuring 12.5m x 12.5m x 10m
5. The Mineral Reserves were estimated based on the NI 43-101
Mineral Resources, both effective as of 5 January 2015
6. A 90.1% metallurgical gold recovery was used
Amara's Mineral Resource statement is included in Appendix
A.
PFS confirms Yaoure's Strong Economics
The NI 43-101 compliant PFS supports the scenario of processing
6.5Mtpa of ore from an open pit operation to produce an average of
218,000 ounces of gold per annum over an initial 11 year mine life.
The metallurgy is simple and non-refractory and the plant has been
designed to process Yaoure's substantial resource achieving a
recovery rate of over 90% using conventional whole ore leach
processing methods in a carbon-in-pulp ("CIP") circuit. The project
demonstrates strong economics due to its low processing costs,
which are driven by an energy cost of 8 cents/kWh from a nearby
hydro-electric power dam. Total cash costs (including refining and
royalties) are US$739 per ounce over the LOM and all-in sustaining
costs are US$782 per ounce.
MII Scenario
Following the delivery of the PFS, Amara will continue to
progress Yaoure towards a BFS, which is expected to be completed in
H1 2016. A drilling programme, initially consisting of
approximately 6,000 metres, commenced at Yaoure in April 2015. Its
objective is to upgrade a portion of the remaining Inferred Mineral
Resources, so that these additional resources can be included as
Mineral Reserves for a NI 43-101 compliant BFS.
The key technical, operational and financial parameters for the
PFS and MII scenario are summarised in the following table, along
with the parameters of the PEA 6.5Mtpa scenario:
Parameters Unit PFS MII Scenario PEA 6.5Mtpa
Scenario
--------------------------- ------------- -------- ------------ -----------
Mining
--------------------------- ------------- -------- ------------ -----------
Ore mined Mt 70.4 66.6 63.9
--------------------------- ------------- -------- ------------ -----------
Waste mined Mt 318.2 220.6 314.0
--------------------------- ------------- -------- ------------ -----------
Strip ratio waste:ore 4.5:1 3.3:1 4.9:1
--------------------------- ------------- -------- ------------ -----------
Contained gold Koz 2,663 2,766 3,140
--------------------------- ------------- -------- ------------ -----------
Open pit mine life years 11 10 10
--------------------------- ------------- -------- ------------ -----------
Processing
--------------------------- ------------- -------- ------------ -----------
Processing plant
capacity Mtpa 6.5 6.5 6.5
--------------------------- ------------- -------- ------------ -----------
Average head grade
processed in years
1-4 g/t 1.56 1.74 1.45
--------------------------- ------------- -------- ------------ -----------
Average head grade
processed g/t 1.18 1.29 1.53
--------------------------- ------------- -------- ------------ -----------
Average gold recovery
rate % 90.1 90.2 95.2
--------------------------- ------------- -------- ------------ -----------
Average annual production
over LOM ounces 218,000 247,000 279,000
--------------------------- ------------- -------- ------------ -----------
Average annual production
in years 1-4 ounces 291,000 323,000 258,000
--------------------------- ------------- -------- ------------ -----------
Capital costs
--------------------------- ------------- -------- ------------ -----------
Plant and infrastructure
capital cost US$ million 254 254 244
--------------------------- ------------- -------- ------------ -----------
Mining fleet US$ million 107 107 75
--------------------------- ------------- -------- ------------ -----------
Pre-stripping US$ million 33 33 -
--------------------------- ------------- -------- ------------ -----------
Contingency US$ million 53 53 38
--------------------------- ------------- -------- ------------ -----------
Total pre-production
capital cost US$ million 447 447 357
--------------------------- ------------- -------- ------------ -----------
Total capital payback
period years 3.0 2.3 2.6
--------------------------- ------------- -------- ------------ -----------
Operating costs
--------------------------- ------------- -------- ------------ -----------
Total cash costs
(including royalties) US$/oz 739 608 594
--------------------------- ------------- -------- ------------ -----------
All-in sustaining
costs US$/oz 782 648 624
--------------------------- ------------- -------- ------------ -----------
This MII scenario is more representative of the project Amara
will build and its key metrics are largely in line with the
compelling PEA 6.5Mtpa scenario that was delivered in March
2014.
Comprehensive background information on the PFS and MII Scenario
is included in Appendix B.
Economic Sensitivity Analysis
The economic analysis uses an average gold price of US$1,250 per
ounce over the life of the PFS and MII Scenario. This gold price
was used for the base case as it allows Amara to compare the PFS
and MII scenario against the PEA, which was also based upon a
US$1,250 per ounce gold price, and also against Yaoure's peers in
West Africa.
This data is presented with a sensitivity analysis which
examines the project economics at different gold prices:
PFS Discount Rate and Gold Price Sensitivity
US$1,100 US$1,200 US$1,250 US$1,300 US$1,400 US$1,500
--------------- --------- -------- --------- -------- --------- --------
Post-tax NPV
(US$m)
--------------- --------- -------- --------- -------- --------- --------
Cash flow (0%
discount) 311 528 630 733 923 1,127
--------------- --------- -------- --------- -------- --------- --------
5% discount 150 312 390 468 613 767
--------------- --------- -------- --------- -------- --------- --------
8% discount 80 219 286 353 477 609
--------------- --------- -------- --------- -------- --------- --------
10% discount 41 167 228 289 401 522
--------------- --------- -------- --------- -------- --------- --------
Post-tax IRR
(%) 12 19 23 25 31 36
--------------- --------- -------- --------- -------- --------- --------
MII Scenario Discount Rate and Gold Price Sensitivity
US$1,100 US$1,200 US$1,250 US$1,300 US$1,400 US$1,500
--------------- --------- -------- --------- -------- --------- --------
Post-tax NPV
(US$m)
--------------- --------- -------- --------- -------- --------- --------
Cash flow (0%
discount) 638 851 958 1,065 1,262 1,476
--------------- --------- -------- --------- -------- --------- --------
5% discount 405 568 650 731 883 1,046
--------------- --------- -------- --------- -------- --------- --------
8% discount 301 442 513 583 714 855
--------------- --------- -------- --------- -------- --------- --------
10% discount 243 372 436 500 620 748
--------------- --------- -------- --------- -------- --------- --------
Post-tax IRR
(%) 24% 30% 33% 36% 41% 46%
--------------- --------- -------- --------- -------- --------- --------
In the MII Scenario strong returns continue to be delivered at a
gold price of US$1,100 per ounce, with a post-tax IRR that remains
above 20% and a post-tax NPV of US$301 million.
Opportunities for Optimisation
The following key opportunities for optimisation were generated
by the PFS. It is expected that they will further improve the
project economics and Amara believes they warrant further
investigation as part of the on-going advancement of Yaoure:
-- Selective mining of higher grade CMA zone:
o In the current 6.5Mtpa plant - if a selective mining approach
was used for the CMA zone and a bulk mining approach was used for
the Yaoure Central zone, the overall grade going to the plant could
be improved
o In a smaller plant - if only ore from the CMA zone was
processed through a smaller processing plant, the upfront capital
cost would be positively impacted and it could potentially deliver
a stronger IRR
o In staged development - this would deliver a reduced upfront
capital requirement, which may be more palatable for a company of
Amara's size given the current challenging market conditions.
Further work is required on the potential for a smaller plant and
staged development
-- Optimisation of fleet - the mining schedule of the PFS has
been optimised to deliver the strongest production in the early
years of Yaoure's mine life, however this requires a larger mining
fleet than previously budgeted. After the first few years, a
smaller fleet would be sufficient. Amara will investigate scenarios
to better optimise Yaoure's fleet
-- Dry tailings storage facility - initial work has suggested
that it may be more cost efficient to utilise a dry tailings
storage facility rather than the current wet tailings
-- Generating revenue from waste rock - Amara has identified an
opportunity to monetise the waste rock generated by the large scale
mining operation at Yaoure, which has the potential to provide
another source of revenue and reduce the long-term environmental
costs and footprint
-- Re-processing existing heap leach pads - initial auger
drilling has indicated that the existing heaps on the Yaoure site
contain approximately 50-80,000 ounces. It may be economic to
reprocess these heaps in order to generate additional cash flow
early in the mine life, with a low cost anticipated due to the
nature of the heaps
Next Steps
Upgrading the Yaoure Mineral Resource
A 6,000m drilling programme has commenced to upgrade a portion
of the remaining Inferred ounces in the Yaoure deposit to
Indicated. This is expected to allow Amara to deliver a BFS in-line
with the original PEA. Amara will report a Mineral Resource update
in Q4 2015.
Further exploration of Yaoure Central zone
Historic RC drilling and rip line data, collected when Yaoure
was being operated previously, has highlighted areas of the current
block model defined as waste where gold mineralisation is likely to
be present. While this data cannot be used within the current
Mineral Resource estimate, it may indicate that by reducing the
drill spacing in the Yaoure Central zone the estimate of total gold
content could increase through demonstrating greater continuity of
high and low grade areas. Undertaking this work is also expected to
upgrade a portion of the Indicated resources to the Measured
category, further increasing Amara's confidence in the deposit.
Exploration of wider Yaoure licence area
Utilising Amara's increased knowledge of gold genesis and
mineralisation controls from the Yaoure deposit, the Group has
embarked on a regional target generation programme, initially
utilising geophysics and soil geochemistry. The Yaoure resource
area is contained in only a small portion of Amara's total
exploration licences and soil geochemistry and structural mapping
have identified other areas similar to the resource area. Through
further geological mapping, trenching and soil sampling, Amara
intends to identify drilling targets with the potential to deliver
satellite deposits for Yaoure.
Fully funded to deliver a BFS
The results to date indicate that Yaoure should be taken to the
next level of engineering study and economic assessment. Work on
the optimisation opportunities identified will be undertaken in
conjunction with further in-fill drilling to upgrade a portion of
the remaining Inferred resources to Indicated and to upgrade a
portion of the Indicated resources to Measured.
Amara is fully funded to deliver a BFS for Yaoure following a
placing to raise US$22 million in January 2015. In April 2015 IFC
proposed a strategic investment of US$10 million and following the
completion of this investment, Amara will be funded until the end
of 2016. This will allow the Group time for discussions with banks
and other financial institutions for the financing of Yaoure to the
production stage.
Environmental licence and exploitation licence
Amara intends to submit its application for an exploitation
(mining) licence to the government of Côte d'Ivoire in July 2015,
which will include its Environmental and Social Impact Assessment.
The Group expects to receive both its environmental licence and its
mining licence by the end of H1 2016.
APPENDICES
A. Yaoure Mineral Resource statement
Yaoure Mineral Resource estimate within a US$1,500 per ounce pit
shell, including cut-off grade sensitivity, as of 5 January
2015
Indicated Inferred
-------- -------------------------- --------------------------
Cut-Off Tonnes Grade Content Tonnes Grade Content
g/t (Mt) (g/t) (Koz) (Mt) (g/t) (Koz)
Au
-------- ------- ------- -------- ------- ------- --------
0.5 106.3 1.29 4,416 63.0 1.19 2,405
-------- ------- ------- -------- ------- ------- --------
0.8 62.5 1.75 3,526 37.4 1.57 1,883
-------- ------- ------- -------- ------- ------- --------
1.0 46.7 2.05 3,070 26.9 1.83 1,580
-------- ------- ------- -------- ------- ------- --------
Notes to Mineral Resource tables
1. The effective date of the Yaoure Mineral Resource estimate is
5 January 2015, prepared by Mario E Rossi, GeoSystems
International, Inc. Pit optimisation work for this was completed by
A. Wheeler.
2. The gold price used in the Mineral Resource estimate is
US$1,500 per ounce, assuming an open pit mining scenario,
processing via tank leaching. Pit slopes are 44 in oxide, 53 in
sulphide. Recoveries have been assumed at 90%. Pit optimisation was
completed by A. Wheeler for all prices shown here.
3. Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
4. There are no known environmental, permitting, legal, title,
taxation, socio-economic, marketing, and political or other
relevant issues that may materially affect the resource
estimates.
5. Totals and average grades are subject to rounding to the
appropriate precision and some columns or rows may not compute
exactly as shown.
6. The stated resources include dilution in the block model that
relates to the level of low selectivity envisioned in an open pit
operation, assuming 10m bench heights.
B. Background information on the PFS and MII Scenario
Mine Plan
Yaoure is planned to be developed and mined as a single open
pit, comprising the CMA and Yaoure Central deposits. It is designed
as a simple bulk mining operation and is based on an owner-operator
scenario, using drill and blast with trucks and shovels for loading
and haulage and with an average primary fleet of 130-150 tonne
trucks, 22m(3) electric hydraulic face shovels and 10-12m(3) front
end loaders.
The resulting strip ratio is relatively low at 4.5:1 in the PFS
and 3.3:1 in the MII Scenario due to the shallow dipping nature of
the mineralised zones.
Unlike the PEA which delivered the strongest average annual
production in years 7-10 of the mine life, the PFS and MII
Scenario's mine plans focus on bringing the strongest years of
production to the start of the mine life. While this adds an
additional capital requirement for pre-stripping, this is offset by
the benefit of having stronger cash flow earlier in the mine life.
This ensures Yaoure's value is unlocked as rapidly as possible and
generates a total capital payback period of 3.0 years in the PFS
and 2.3 years in the MII Scenario.
Metallurgy and Processing
Yaoure's mineralisation is simple and non-refractory. As part of
the PFS work programme, Amara undertook a comprehensive
metallurgical testwork campaign in 2014 and it demonstrated high
gold recoveries over a 24 hour period using cyanide leaching. Whole
ore processing via tank leach followed by CIP is a conventional
processing method and it was selected as being the most cost
effective, with an estimated design recovery rate of 90.1%.
The test work programme also further evaluated comminution
process selection. SAG milling was excluded from the PEA in favour
of three stage crushing as a result of a single composite sample.
However the 2014 metallurgical test work programme has shown that
the rock is softer than the single composite suggested and
therefore amenable to single stage crushing followed by a SAG and
ball mill combination, thus reducing its operating costs.
Operating Costs
Costs were calculated by Tetra Tech, Inc., using a range of data
sources and first principle estimates.
In the PFS, Yaoure delivers an all-in sustaining cost of US$782
per ounce, benefiting from the large-scale operation and low
relative input costs, and an all-in cost of US$968 per ounce. In
the MII scenario, Yaoure delivers an all-in sustaining cost of
US$648 per ounce and an all-in cost of US$827 per ounce.
Cost Breakdown in PFS and MII Scenario
Category Unit PFS MII
---------------------------------- ---------------- ----- -----
Mining US$/t mined 2.08 2.04
---------------------------------- ---------------- ----- -----
Processing US$/t processed 10.63 10.64
---------------------------------- ---------------- ----- -----
Other General and Administration
("G&A") US$/t processed 1.69 1.79
---------------------------------- ---------------- ----- -----
Category (US$/oz produced) PFS MII
-------------------------------- --- ---
Mining 324 222
-------------------------------- --- ---
Processing 312 284
-------------------------------- --- ---
G&A 49 48
-------------------------------- --- ---
Operating Cash Cost 685 554
-------------------------------- --- ---
Freight and refining 4 4
-------------------------------- --- ---
Royalties (and community fund) 50 50
-------------------------------- --- ---
Total Cash Cost 739 608
-------------------------------- --- ---
Sustaining Capex 43 40
-------------------------------- --- ---
All-In Sustaining Cost 782 648
-------------------------------- --- ---
Total Pre-Production Capex 186 179
-------------------------------- --- ---
All-in Cost 968 827
-------------------------------- --- ---
Processing costs
One of the key cost drivers for gold mines is the price of
power. Yaoure is located 5km from the Kossou dam and power station,
which offers low-cost grid power from a combination of
hydro-electric power and oil & gas generated power from other
power stations in country. The processing plant is powered
exclusively by grid power.
Based on tariff proposals from the Côte d'Ivoire state
electricity provider, Compagnie Ivorienne Electricité (CIE), an
average power cost of 8 cents/kWh is estimated, which is
significantly lower than the average cost of heavy fuel oil
generation (20-25 cents/kWh) or diesel generation (30-35 cents/kWh)
in West Africa. This represents a distinct advantage for Yaoure in
terms of project economics, which is realised in the relatively low
processing costs of US$10.63/t processed in the PFS.
The PFS also utilises SAG milling, which is lower cost than the
three stage crushing used in the PEA. Combined with the relatively
low reagent consumption of the Yaoure ore, this delivers a low
processing cost per tonne.
Mining costs
Yaoure benefits from low mining costs due to:
-- Low cost power - electric shovels form part of the mining
fleet in order to fully utilise the availability of low cost grid
power
-- Low oil price - the PFS and MII scenario are based upon a
five year quote for diesel fuel priced at US$0.84/litre
-- Rationalised site layout to minimise cycle times to waste rock dumps
-- Owner-operator mining - contractor mining is higher cost in terms of mining cost per tonne
-- Simple ore body that is amenable to a bulk mining approach -
less costly than selective mining approach
-- Single pit - all ore will be trucked from one pit covering
the two zones so trucking distances are optimised
-- Large operation that benefits from economics of scale
-- Locally produced explosives for blasting
Other factors influencing operating costs
Yaoure's location presents other infrastructural benefits,
besides the low-cost power and abundant water supply, such as a
high quality road network connecting the project to the capital
Yamoussoukro (40km) and the port of Abidjan (280km). There is also
good accommodation and a mining university in Yamoussoukro offering
a skilled workforce in the region.
Capital Costs
The total capital cost for the LOM is estimated at US$549
million, a small increase compared to the US$524 million included
in the PEA. This is due to the inclusion of a mining pre-strip to
allow higher grade ore to be accessed in the early years of the
mine life, strengthening overall economic returns. Of this total,
pre-production capital costs total US$447 million, including a
contingency of US$53 million.
Tetra Tech, Inc. assesses its capital estimate for the plant and
infrastructure to be accurate to +/- 30%. A breakdown is set out in
the table below:
Capital Costs US$m
-------------------------------------- -----
Process plant 112
Tailings Management Facility ("TMF") 14
Infrastructure and site facilities 53
EPCM and Indirects 75
Plant and Infrastructure Capital
Cost 254
Mining fleet 107
Mining pre-strip 33
Contingency 53
-----
Total Pre-Production Capital Cost 447
-------------------------------------- -----
The plant and infrastructure capital cost is in line with the
original estimate of US$244 million set out in the PEA. The LOM
cost of the mining fleet in the PFS is similar to the PEA, however
a larger fleet is purchased upfront to allow stronger production in
the mine's early years. This is off-set by savings in sustaining
capital.
The Total Sustaining and Closure Capital over the LOM includes
the mine closure costs and the development of the TMF. A breakdown
is set out in the table below:
Sustaining and Deferred Capital Costs
--------------------------------------------
Mining 40
Process and Infrastructure excluding
TMF 30
TMF 23
Closure costs 9
Total Sustaining and Closure Capital 102
-------------------------------------- ----
The closure costs are stated net of an estimated US$15 million
salvage value for the mining fleet at the end of the mine life.
Fiscal Terms
Amara participated in discussions between the Government of Côte
d'Ivoire and a number of other mining companies operating in
country in the drafting of a new mining code. The new code was
approved by Parliament in early March 2014. The PFS is based on the
2014 mining code, implementing fiscal regulation and recent
precedent mining agreements in country. The assumptions are
provided in the table below:
Item Unit Rate
---------------------------- --------- -----
Corporate Tax % 25
---------------------------- --------- -----
Government free-carry % 10
---------------------------- --------- -----
Community Fund % Revenue 0.5
---------------------------- --------- -----
Royalties Scale
---------------------------- --------- -----
<=US$1,000/oz % 3
---------------------------- --------- -----
<=US$1,300/oz % 3.5
---------------------------- --------- -----
<=US$1,600/oz % 4
---------------------------- --------- -----
<=US$2,000/oz % 5
---------------------------- --------- -----
> US$2,000/oz % 6
---------------------------- --------- -----
Tax Holiday Years 5
---------------------------- --------- -----
The Government of Côte d'Ivoire is entitled to a 10% free carry,
as is usual in Francophone West Africa, once Yaoure's exploration
licence is converted to an exploitation (mining) licence. The
figures in this announcement are based on Amara's current 100%
ownership of the project.
The project will also benefit from an exemption against VAT,
preventing the excessive build-up of taxation debtors due from
government seen in other West African jurisdictions.
PFS Preparation
The PFS has been prepared by Amara with input from GeoSystems
International Inc., which reported the Mineral Resource estimate,
Tetra Tech, Inc., which proposed the engineering design and cost
estimates for the process plant and associated infrastructure for
the Project, Adam Wheeler, an independent mining consultant, who
provided the optimised pit designs, and AMEC plc, which reviewed
the metallurgical work. AMEC plc is also responsible for the
Environmental and Social Impact Assessment for Yaoure.
A NI 43-101 compliant technical report supporting the results of
the PFS will be published on Amara's website in the coming
months.
The MII Scenario is solely the responsibility of Amara.
Qualified Person
Andrew Carter is a "Qualified Person" within the definition of
NI 43-101 and is responsible for the mineral processing and
recovery methods upon which the PFS is based. He has reviewed and
approved the relevant technical information relating to the
recovery methods in this release. Eur.Ing. Carter (CEng., MIMMM,
MSAIMMM, SME) is General Manager, UK and Chief Metallurgist with
Tetra Tech Inc.
Richard Elmer is a "Qualified Person" within the definition of
NI 43-101 and is responsible for the TMF design upon which the PFS
is based. He has reviewed and approved the relevant technical
information relating to tailings management in this release. Mr
Elmer (BSc, MSc, CEng, MIMMM) is a Principal of Knight Piésold
Limited.
Stephen Hill is a "Qualified Person" within the definition of NI
43-101 and is responsible for the Infrastructure upon which the PFS
is based. He has reviewed and approved the relevant technical
information relating to the infrastructure in this release. Mr Hill
(BEng, CEng, MIMechE) is Senior Project Manager with Tetra Tech
Inc.
Leonard van der Dussen is a "Qualified Person" within the
definition of NI 43-101 and is responsible for the Capital Cost
estimation upon which the PFS is based. He has reviewed and
approved the relevant technical information relating to the cost
estimation in this release. Mr van der Dussen (MSc (QS), PrQS) is a
Project Cost Consultant and Senior Partner with VDDB Project
Services.
Adam Wheeler is a "Qualified Person" within the definition of NI
43-101 and is responsible for the pit design and mining schedule
upon which the PEA is based. He has reviewed and approved the
relevant technical information /relating to the mining schedule in
this release. Mr Wheeler (BSc Mining, MSc Mining Engineering, C
Eng, Eur Ing)) is an Independent Mining Consultant.
Peter Brown is a "Qualified Person" within the definition of NI
43-101 and has verified the data disclosed in this release with
regards to the exploration conducted at Yaoure for Amara, including
sampling, analytical and test data underlying the information
contained herein, and reviewed and approved the information
contained within this announcement. Dr Brown (MIMMM) is the Group
Exploration Manager.
Mario Rossi is a "Qualified Person" within the definition of NI
43-101 and is responsible for the estimation of the Yaoure Mineral
Resource. He has reviewed and approved the relevant technical
information relating to the resource estimates in this release. Mr
Rossi (Fellow AusIMM, Member CIM, Member SME) is Principal
Geostatistician of GeoSystems International, Inc.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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