TIDMMWA
RNS Number : 9402W
Mwana Africa PLC
25 August 2015
QUARTERLY UPDATE
(Q1 FY2016 - quarter ended 30 June 2015)
21 August 2015
Mwana Africa PLC
("Mwana", the "Group" or the "Company")
Mwana Africa is pleased to provide an update on operations and
exploration activity for the quarter ended 30 June 2015.
OPERATIONAL HIGHLIGHTS
GOLD - FREDA REBECCA (ZIMBABWE)
-- Tonnes milled decreased by 0.3% to 293,759t in Q1 FY2016
compared to 297,953t in Q4 FY2015, mainly due to a 1% decrease in
mill running time
-- The average feed grade for Q1 FY2016 increased by 11% from 1.81g/t in Q4 FY2015 to 2.03g/t
-- Gold recovery rate for Q1 FY2016 declined by 1% to 82% from 83% in Q4 FY2015
-- 16,985 ounces (oz) of gold were produced in Q1 FY2016 against
13,443oz in Q4 FY2015. The production increase was mainly
attributable to the 11% increase in the mill's average feed
grade
-- C1 cash costs were 25% lower in the quarter under review at
US$930/oz from US$1,234/oz in Q4 FY2015 largely because of an
increase in ounces produced and a 5% reduction in operating costs.
All-in sustaining costs were cut by 24% to US$1,093/oz from
US$1,429/oz in Q4 FY2015.
-- The average gold price received in Q1 FY2016 was 3% lower at
US$1,186/oz compared to US$1,223/oz in Q4 FY2015
NICKEL - TROJAN NICKEL MINE (ZIMBABWE)
-- Production of nickel in concentrate dropped by 34% to 1,349t
compared to 2,032t in Q4 FY2015, primarily due to a reduction in
average head grade and recoveries
-- Head grade was 26% lower at 1.2% compared to 1.67% in Q4
FY2015 due lower production of massive ores areas compared to the
previous quarter
-- Recovery was 3% lower at 84% against 86.9% in Q4 FY2015
-- The average net realized nickel in concentrate price dropped
by 11% to US$8,461/t compared to US$9,489/t in Q4 FY2015
-- Nickel sales were 39% lower at 1,267t compared to 2,072t in
Q4 FY2015 due to lower production
-- C1 actual cash costs of nickel in concentrate rose 29% to
US$8,901/t from US$6,926/t Q4 FY2015, and actual all-in-sustaining
costs of nickel in concentrate rose by 35% to US$9,736/t in the
quarter under review from US$7,209/t in Q4 FY2015 as a result of
lower production and refurbishment of equipment
DIAMONDS - KLIPSPRINGER (SOUTH AFRICA)
-- Klipspringer's throughput of Marsfontein fine residue
tailings fell to 38,760 tonnes which was 10% lower than in Q4
FY2015
-- Head grade improved by 8% to 44 carats per hundred tonnes
(cpht). Mining continued through a transition zone so as to access
higher grade material
-- Diamond sales fell by 45% quarter-on-quarter
-- The price received for fine diamonds produced by the mine
fell by 7% quarter-on-quarter. This was in line with market
conditions, which are expected to remain constrained.
EXPLORATION HIGHLIGHTS
GOLD - ZANI-KODO (DEMOCRATIC REPUBLIC OF CONGO - DRC)
-- Field mapping was completed in the Godawiza and Djalasega
areas. Exploration activity has now moved to the Kepira and Kodo
West areas where prospective lithologies and structures have been
identified.
COPPER/COBALT - SEMHKAT/HAILIANG JV (DEMOCRATIC REPUBLIC OF
CONGO - DRC)
-- Fieldwork, including mapping, soil sampling and drilling, has
been initiated by JV joint-venture partner Hailiang on five
priority target areas.
Yat Hoi Ning, Mwana's Executive Chairman, commented:
The past quarter has not been without its challenges, but I am
pleased to say that they have been addressed progressively and
appropriately. Our main challenges have been external, particularly
those of falling commodity prices. However, I remain confident that
we can manage and counter the effects of lower prices by operating
effectively and economically.
At Freda Rebecca the average gold price received was
US$1,186/oz, its lowest in several quarters. But we countered the
adverse effect by producing more gold which, in turn, contributed
to a significantly lower cash cost of US$930/oz and an all-in
sustaining cost of US$1,093/oz. This means the mine remains
operationally profitable and will be maintained in that state.
At Bindura Nickel's Trojan mine, operations continued to be
hampered by the continued upgrading of equipment; upgrading that
will ensure there are fewer interruptions in future. Underground
development work has proceeded more slowly than had been planned,
but with the redeep project now scheduled for completion in October
2015, the current financial year's second half should see
considerable operating improvements that will be followed by the
benefits of the smelter restart.
Work on the restart is proceeding on schedule and, when
completed, will result in our receiving enhanced prices for the
nickel contained in our products. During the quarter under review
underground operations were affected by temporary poor availability
of ore draw points which resulted in lower utilisation of equipment
and increases in underground transport equipment. The result was
slower mining rates, though these should improve sharply during the
current quarter.
At our Klipspringer diamond joint venture revenues were affected
by the lower diamond prices that have been affecting all diamond
producers. The processing plant, which recovers gems from old
slimes tailings, suffered temporary technical problems which
lowered production, but this is expected to be resolved in the
current quarter.
In line with the company's determination to limit expenditure,
prospecting work with our partners in the DRC has been contained.
It has been restricted largely to field work designed to locate
further exploration targets and to improve our knowledge of those
already delineated.
Overall costs were tightly controlled in the quarter under
review, and this will continue well into the future. It is far from
clear when commodity prices will improve from their currently
depressed levels, but our operations remain cash-flow positive and
our capital programmes will remain on track.
For further information please visit www.mwanaafrica.com or
contact:
Mwana Africa PLC
Yim Kwan, Finance Director
Amilha Young, Group General Counsel and Company Secretary
Tel: +44(0) 20 3696 5470
Public Relations
Russell and Associates (South Africa)
Tel: +27 (0) 11 880 3924
Leigh King: email: leigh@rair.co.za
Jim Jones: email: jim@rair.co.za
OPERATIONS
GOLD: FREDA REBECCA GOLD MINE (ZIMBABWE)
Quarter ended
-------------------- ---------- --------------------------------------
FREDA REBECCA MINE Jun-15 Mar-15 Dec-14 Sep-14
-------------------- ---------- -------- -------- -------- --------
Tonnes mined (t) 351,202 256,459 296,085 290,771
-------------------- ---------- -------- -------- -------- --------
Tonnes milled (t) 293,759 297,953 322,216 319,767
-------------------- ---------- -------- -------- -------- --------
Head grade (g/t) 2.03 1.81 1.89 2.25
-------------------- ---------- -------- -------- -------- --------
Recovery (%) 82% 83% 76% 80%
-------------------- ---------- -------- -------- -------- --------
Gold sales (oz) 16,985 13,443 14,298 16,555
-------------------- ---------- -------- -------- -------- --------
Average gold price
received (US$/oz) 1,186 1,223 1,195 1,272
-------------------- ---------- -------- -------- -------- --------
Cash cost (C1) (US$) 930 1,234 1,118 880
-------------------- ---------- -------- -------- -------- --------
All-in sustaining
cost (C3) (US$) 1,093 1,430 1,304 1,061
-------------------- ---------- -------- -------- -------- --------
-- Figures shown are unaudited and may vary upon final audit.
-- C1 cash cost includes costs for mining, processing,
administration, accounting movements for stockpiles and
gold-in-circuit, and, net proceeds from by-product credits. It
excludes capital costs for exploration, mine development or
processing mill capital works and royalties.
-- C2 production cost reflects C1 costs plus depreciation and
amortisation, thus incorporating the capital cost of
production.
-- C3 all-in sustaining cost reflects C2 plus interest, other
indirect costs and royalties. All-in sustaining costs represents
all costs attributable to gold production over the period.
COMMENTARY
Tonnes mined for the quarter under review increased by 37% to
316,151t from 256,459t in the previous quarter. The upturn in
performance was underpinned by improved availability of loading
units and flexibility of stopes which resulted from availability of
previously flooded stopes as well as stope F890A06B.
Q1 FY2016 gold production increased by 6% to 16,985oz compared
to 13,443oz in Q4 FY2015 mainly as a result of an 11% increase in
feed grade. Tonnes milled fell slightly by 0.3% to 297,953t in Q1
FY2016 (Q4 FY2015: 297,953t) due in part to a 1% decrease in mill
running time. The running time for the quarter was mainly affected
by grate relining for both mills and replacement of the No. 1
mill's trunnion liner.
The average feed grade for Q1 FY2016 increased by 11% to 2.03g/t
(Q4 FY2015: 1.81g/t). This was a result of mining areas with higher
grade confidence which was achieved by utilising data from
evaluation-drilling to do short-term planning.
Gold recovery for Q1 FY2016 declined by 1% to 82% from 83% in
the previous quarter. The decrease resulted from fine-carbon losses
to tails.
(MORE TO FOLLOW) Dow Jones Newswires
August 25, 2015 02:00 ET (06:00 GMT)
In Q1 FY2016, C1 cash costs reduced by 25% to US$930/oz (Q4,
FY2015: US$1,234/oz). In Q4 FY2015, C1 included a one-off provision
for doubtful debts relating to a contribution made to the Bindura
Community Share Ownership Trust of US$1,491,147. This accounts for
the major decrease in costs in Q1 FY2016. All-in sustaining costs
realised a net decrease of 24% from US$1,429/oz in Q4 FY2015 to
US$1,093/oz.
NICKEL: TROJAN NICKEL MINE (ZIMBABWE)
Quarter ended
---------------------- --------- --------------------------------------
TROJAN MINE Jun-15 Mar-15 Dec-14 Sep-14
---------------------- --------- -------- -------- -------- --------
Tonnes milled (t) 129,523 140,045 148,712 161,107
---------------------- --------- -------- -------- -------- --------
Head grade (%) 1.240 1.669 1.156 1.496
---------------------- --------- -------- -------- -------- --------
Recovery (%) 84.0 86.9 80.5 82.5
---------------------- --------- -------- -------- -------- --------
Ni in concentrate (t) 1,349 2,032 1,383 1,989
---------------------- --------- -------- -------- -------- --------
Nickel sales (t) 1,267 2,072 1,395 2,008
---------------------- --------- -------- -------- -------- --------
Average nickel price (US$/t) 8,461 9,489 10,313 12,085
---------------------- --------- -------- -------- -------- --------
Cash cost (C1) (US$/t) 8,901 6,926 10,666 7,392
---------------------- --------- -------- -------- -------- --------
All-in sustaining
cost (C3) (US$/t) 9,736 7,209 11,491 8,059
---------------------- --------- -------- -------- -------- --------
-- Figures shown are unaudited and may vary upon final audit.
-- Cash cost per tonne includes costs for mining, processing,
administration, offtake costs and penalties, transport costs,
accounting movements for stockpiles, and net proceeds from
by-product credits. It excludes capital costs for exploration, mine
development or processing mill capital works, and, the cost of
royalties.
-- All-in sustaining cost reflects cash cost per tonne plus depreciation and amortisation, thus incorporating the capital cost of production, plus interest, other indirect costs and royalties. All-in-sustaining cost represents all costs attributable to nickel production over the period.
-- Note: the company has amended the reporting of the nickel
price received, cash cost and all-in sustaining cost. The average
nickel price received reflects the actual price received rather
than the actual average price for the quarter as previously
reported. Cash costs and all-in sustaining costs are now reported
as actual costs incurred, previously these costs were adjusted for
the opportunity cost forgone as a result of selling a nickel
concentrate rather than a nickel cathode.
COMMENTARY
Milled tonnage was 8% lower quarter-on-quarter at 129,523t (Q4
FY2015: 140,045t). Milled tonnage was mostly affected by
availability of active draw points. This affects ore availability
and machine utilisation adversely as tramming distances double.
Production is expected to increase in the second quarter due to the
ongoing 100-day "Rapid Results Projects" which is expected to
increase the number of draw-points and reduce the LHDs' hauling
distances. The mine will be on a two-week shut down for the month
of July while the sub-vertical service winder is upgraded to reduce
the risk of future breakdowns.
The mill head grade was 26% lower at 1.240% (Q4 FY2015: 1.669%)
due to lower availability of the "massives" production areas
against that during Q4 FY2015. Nickel production fell by 34% to
1,349t (Q4 2015: 2,032t) as a result of lower ore-production
tonnage and relatively lower grades.
The average price of nickel in concentrate received decreased by
11% to US$8,461/t (Q4 FY2015: US$9,489/t). Nickel prices continued
to fall during the quarter. Analysts predict an eventual
improvement in the nickel price as demand is expected to increase,
though the timing of this is uncertain.
Cash costs increased by 29% to US$ 8,901/t (Q4 FY2015:
US$6,926/t) and all-in sustaining costs increased by 35% to
US$9,736/t (Q4 FY2015: US$7,209/t) due to the lower production
described above. The company has implemented various cost-reduction
initiatives to combat the effect on profits of lower nickel prices.
There is a particular focus on cost reduction throughout the
organisation.
There have been delays on the re-deep project which is now
expected to be completed in October 2015. The completion of this
project will enable development into, and production from, massive
ore bodies.
Work on the smelter restart project continued. Design work,
which had been suspended, has resumed with a focus to expedite the
outstanding areas. These include the feed system, off-gas system,
furnace roof and sealing arrangements as well as control and
instrumentation. A structural audit was completed during the period
and the report will be the basis of future refurbishment work. The
cooling tower for the compressor-house cooling system was received
and installed. Converter off-gas ducting and the precipitator
transition pieces were delivered to site. Brick manufacture is now
reported to be at 95% and shipping arrangements are in place. The
overall project accomplishment is at 36%. The project commitment is
at US$13 million and payments to date are US$7million.
DIAMONDS: KLIPSPRINGER (SOUTH AFRICA)
Quarter ended
----------------------- ---------- -----------------------------------
KLIPSPRINGER MINE Jun-15 Mar-15 Dec-14 Sep-14
----------------------- ---------- ------- -------- ------- -------
Tonnes treated (t) 38,762 43,504 49,939 44,200
----------------------- ---------- ------- -------- ------- -------
ROM diamonds produced (carats) 17,176 17,870 31,850 32,425
----------------------- ---------- ------- -------- ------- -------
Head grade (cpht) 44.31 41.08 63.8 73.3
----------------------- ---------- ------- -------- ------- -------
Recovery (%) 99.2% 95.7[1] 99.7% 98.4%
----------------------- ---------- ------- -------- ------- -------
Diamond sales (carats) 17,099 11,748 44,200 23,150
----------------------- ---------- ------- -------- ------- -------
Average diamond price (US$/ct) $18.11 $19.50 $19.31 $20.93
----------------------- ---------- ------- -------- ------- -------
COMMENTARY
The Greenhurst plant experienced several delays during the
quarter which resulted in reduced reduction in the head feed.
Diamond production fell slightly below the level of Q4 FY2015
due to the reduced tonnage throughput. The mining grade improved
slightly as operations moved through a fine-material transition
zone towards coarser material.
The diamond market remains constrained and the prices received
fell in line with those being reported by major producers. Two
diamond sales took place during the quarter. Both parcels were sold
into the market in Antwerp.
The underground operation along the Leopard fissure remains
under care and maintenance. The shaft bottom and lower level have
been dewatered following the flooding incident at the end of
2014.
EXPLORATION
GOLD: ZANI-KODO (DRC)
-- No drilling was carried out during the quarter.
-- Exploration activity was focused in field assessment of several target areas.
-- At Godawiza and Djalasiga mapping has been completed and
geological maps and geographic information system (GIS) databases
updated. Two new targets, Kepira and Kodo West, have been
identified with two potentially mineralised zones present.
-- At Kepira a thrusted outlier of high-magnetic mafic
lithologies and banded iron formation (BIF) is present with
sulphides locally visible in sheared zones.
-- At Kodo West a sequence similar to that at the Kodo Mine has
been identified, with metagreywacke, BIF and metasiltstone present.
Visible sulphides are locally present in sheared BIF units.
-- Orientation grab sampling has been carried out in both areas
with fieldwork and data compilation ongoing.
COPPER/COBALT: SEMHKAT/HAILIANG JV (DRC)
In early May, ManCom approved the work proposal and budget plan
for five initial 'P1' targets. Execution of the programmes in
Kawesitu, Mwombe, Kibolwe East, Lufira and PR763 commenced at the
end of May. By end June 2015, the following work had been
completed:
Mwombe (PR741) -
-- IP sounding survey: eight points
-- Soil sampling and geological mapping is underway in the target area
-- Three geological sections have been conducted to date
-- Work on two diamond drill holes has begun; some malachite
mineralisation observed. Drilling is continuing
Kawesitu (PR975 North) -
-- Soil samples were collected over an area of 3km(2) during the quarter
Lufira (PR756) -
-- Soil sampling was conducted with 3,130 samples prepared and quick-assayed by Niton on site
-- Two diamond drill holes are in progress
Kibolwe East -
-- Two diamond drill holes were completed to depths of 230m and
240m respectively. No significant mineralisation was
intersected
PR763 -
-- Soil sampling over 14.2km sections was conducted over three anomalies
-- 697 samples were prepared and quick-assayed by Niton on site:
three drill targets have been delineated
Fieldwork is progressing in all 5 P1 target areas.
ABOUT MWANA AFRICA PLC
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