TIDMAVM
RNS Number : 4333Z
Avocet Mining PLC
07 March 2013
Year-end resource and reserve update
Avocet Mining PLC ("Avocet" or "the Company") today announces
its year end Mineral Resources and Ore Reserves for the Inata Gold
Mine ("Inata") and Souma exploration project ("Souma") in Burkina
Faso, and the Tri-K development project ("Tri-K") in Guinea. Key
points for this year end update include:
-- Group Mineral Resources increased from 6.26 Moz. to 8.69 Moz. during course of 2012;
-- Increase in Inata Mineral Resources to 4.69 Moz. both within
and around existing mining permit following over 124,000 metres of
drilling in 2012;
-- Maiden resource estimates announced for the Filio, Pali and
Ouzeni deposits, all located less than 10 km from the Inata
processing plant;
-- Souma Mineral Resource increased by 38% to 0.78 Moz. as
exploration continues along 16km strike length;Tri-K Mineral
Resource increased by 43% to 3.22 Moz. as the project enters
feasibility study stage;
-- Updated Inata Ore Reserve estimate of 0.92 Moz. (13.7 Mt at
2.07 g/t Au), compared with 1.85 Moz. reported previously. This
excludes approximately 0.25 Moz. of Inferred material that would be
upgraded to reserves via infill drilling; and
-- Selection of $1,200/oz. pit shells results in improved cash
flows in the next five years relative to the US$1,400 basis, as a
result of 22% increase in reserve grade and 42% reduction in
life-of-mine stripping ratio when compared to the December 2011
reserve.
Mineral Resources
Group Mineral Resources rose to 8.69 million ounces during the
year, a rise of 39% compared to the corresponding figure for 2011.
The Mineral Resource estimate at Inata now stands at 4.69 million
ounces, including additional resources delineated across the
existing mining licence as well as from maiden Mineral Resource
estimates at new areas such as Filio, Pali and Ouzeni, all of which
sit outside the current 26km(2) mining licence, but are located
within 10 km of the Inata plant. Within the existing mining
licence, the Company intends to conduct a short infill drilling
programme on a series of shallow deposits that lie parallel to both
the Inata and Minfo trends, which will upgrade approximately
250,000 ounces from the Inferred resource category and will
consequently be added to the reserve estimate and life of mine
plan.
A total of 124,170 metres were drilled during 2012 both within
the Inata mining licence and in the area surrounding it, further
adding to the pre-existing database of drilling. A table of Inata
Mineral Resources by pit is provided in Appendix 1.
Resource increases were achieved at Souma (+38%) and Tri-K
(+44%) during 2012. Project updates on both assets will be
announced during H1 2013, including details of Souma's
metallurgical and comminution test work and progress on Tri-K's
feasibility study.
Ore Reserves
The Ore Reserve announced today marks the conclusion of a nine
month review period of Inata's reserves, with input from
independent consultants including Lycopodium, ALS Ammtec
laboratories and Orway Mineral Consultants. The Company's
understanding of the orebody, the processing of which has become
more complex as mining has deepened, has increased significantly as
a result of the technical work performed. In addition, the test
work has allowed the Company to identify areas where further test
work and modest capital expenditure could provide future
improvements, notably in recoveries and plant throughput, which
have been large contributors to the fall in reserves from 1.85
million ounces reported previously to 0.92 million ounces announced
today.
As many of the new resource ounces are predominantly in shallow
areas with benign metallurgy, the larger resource base at Inata and
Souma is expected to allow reserves to rise from the 0.92 million
ounces announced today. In particular, the new reserve does not
incorporate any material from Pali and Ouzeni, which lie within 10
kilometres of the processing plant but outside the limits of the
present mining licence. The reserve estimate also excludes Souma,
which is situated 20 km from the existing Inata mining licence, and
which, subject to economic analysis, could be a satellite pit for
Inata or a stand-alone operation.
The updated Ore Reserves reflect evaluation and test work
principally related to the Inata ore body at depth, where both
metallurgy and hardness are known to be more challenging. By
contrast, more recent drilling has targeted shallower, more
oxidised areas that are expected to convert more readily to
reserves.
The revised Ore Reserve of 0.92 million ounces is based on
Inata's current operations without the benefit of any additional
mining equipment or upgrades to the existing plant. While the
Company plans further test work and technical evaluation of
measures that could improve plant recoveries and throughputs, the
results of these are not yet known and accordingly any such
improvements remain as upside to the new reserve.
Compared to the previous Inata reserve at 31 December 2011,
approximately 250,000 ounces of the reserve decrease is accounted
for by the fact that the new reserve has been estimated based on
pit shells run at a gold price of US$1,200 per ounce, compared with
US$1,400 per ounce used previously. The result is higher grades and
lower stripping ratios that make cash flow in the next five years
higher on the US$1,200 per ounce basis than on the US$1,400 basis.
In the event that further test work and future operating
improvements during 2013 indicate better plant recoveries and
throughputs, the Company will consider whether a larger reserve at
US$1,400 per ounce will be more advantageous in terms of cash flow
as well as longer mine life.
Further to the above, lower recoveries and reduced plant
throughput accounted for decreases of approximately 250,000 and
200,000 ounces respectively, with a further 160,000 ounces
reduction due to mining depletion during 2012.
Details are provided in this release of the test work and
estimation process behind the updated reserve, including the
factors affecting recoveries and throughput.
Based on the updated reserve estimate announced today, the
Company has provided guidance that it expects production to remain
in line with 2012 production, at a total cash cost of
$1,050-1,100/oz. The life of mine plan underpinning the updated ore
reserves is provided later in the announcement.
Group Mineral Resources (as at 31 December 2012):
[See www.avocet.co.uk for associated graphic]
Mineral Resources estimated by CSA Global and reported above a
0.5 g/t Au cut off and below the 31 December 2012 topographic
surface. Inata figures exclude stockpiles and are net of mining
depletion. Figures shown are gross (100%) for each project; ounces
located within the Inata mining licence are 90% attributable to
Avocet. All other projects are 100% owned by Avocet.
Mineral Resource estimates have been made and reported in
accordance with the Australasian code for the reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC
Code). The Mineral Resource estimates are based on information
compiled by Mr John Milovanovic (FAusIMM), Chief Resource Geologist
for Avocet and Mr David Williams (MAusIMM, MAIG), Principal
Consultant, CSA Global Pty Ltd. Mr Milovanovic and Mr Williams have
experience relevant to the style of mineralisation and type of
deposit under consideration and qualify as Competent Persons as
defined by the JORC Code, and Mr Milovanovic and Mr Williams as
Qualified Persons as defined by the Canadian National Instrument
43-101 (NI43-101), for the reporting of Exploration Results,
Mineral Resources and Ore Reserves. Mr Williams and Mr Milovanovic
consent to the inclusion of the technical information in this
announcement in the form and context in which it appears.
Group Ore Reserves (as at 31 December 2012):
[See www.avocet.co.uk for associated graphic]
Ore Reserves estimated using a gold price assumption $1,200 per
ounce. Figures shown above are gross (100%) and 90% are
attributable to Avocet. The government of Burkina Faso holds the
remaining 10%.
Ore Reserves were estimated by Mr Clayton Reeves (MSAIIM). Mr
Reeves is a Competent Person as defined by the JORC Code. Mr Reeves
has consented to the inclusion of the technical information in this
report in the form and context in which it occurs.
Commenting on this update, CEO David Cather said:
"This update on both Mineral Resources and Ore Reserves follows
a pivotal year of exploration, resource definition and
metallurgical test work on the Inata ore body. We now have a
resource base at Inata of nearly 5 million ounces, while today's
updated reserve estimate provides a higher grade base on which to
operate at Inata. In view of the opportunities open to us, however,
I view the new reserve as a base, and therefore look forward to
converting more of our Mineral Resources into Ore Reserves through
infill drilling, continued test work and process improvement, and
enlarging our mining licence. We are excited that in Tri-K and
Souma we have two projects with potential to become mines in the
coming years, and we will continue to update the market on these
projects when appropriate."
Management Conference Call
The Company will host an analyst conference call covering both
this technical announcement and the Company's annual results
(released on the same day as this announcement) at 9:00am (UK) on 7
March 2013.
Dial in details are as follows:
Participant dial-in numbers:
UK: 08006940257
Norway: 21563013
Alternative number: +44 (0)1452 555 566
Conference ID: 12227626
A recording of the conference call will also be made available
on the Avocet website later on the same day.
FOR FURTHER INFORMATION PLEASE CONTACT
Avocet Pelham Bell J.P. Morgan Arctic SEB Enskilda
Mining Pottinger Cazenove Securities Financial
PLC Financial Lead Broker Financial Adviser
PR Consultants Adviser &
& Market Market
Maker Maker
============= ================= ========================= =========== ============
David Cather, Daniel Thöle Michael Wentworth-Stanley Arne Wenger Fredrik
CEO Petter Cappelen
Mike Norris, Bakken
FD
Rob Simmons,
IR
------------- ----------------- ------------------------- ----------- ------------
+44 20 +44 20 7861 +44 20 7742 +47 2101 +47 2100
7766 7676 3232 4000 3100 8500
NOTES TO EDITORS
Avocet Mining is a gold mining and exploration company listed on
the London Stock Exchange (ticker: AVM.L) and the Oslo Børs
(ticker: AVM.OL). The Company's principal activities are gold
mining and exploration in West Africa.
In Burkina Faso the Company owns 90% of the Inata Gold Mine. The
deposit at Inata and its satellite deposits currently comprises a
Mineral Resource of 4.71 million ounces and a Ore Reserve of 0.92
million ounces. The Inata Gold Mine poured its first gold in
December 2009 and produced 135,189 ounces of gold in 2012.
Other assets in Burkina Faso include eight exploration permits
surrounding the Inata Gold Mine in the broader Bélahouro region.
The most advanced of these assets are at Souma, some 20 kilometres
from the Inata Gold Mine, where Mineral Resources of 0.78 million
ounces exist.
In Guinea, Avocet owns 22 exploration licences in the north east
of the country. Exploration has been ongoing since 2005 and the
project at Tri-K is the most advanced. Within the Tri-K project,
the Koulékoun Prospect has a Mineral Resource of 2.29 million
ounces and the Kodiéran Prospect comprises 0.93 million ounces.
Mineral Resource estimate
Group resources have increased by 2.43 million ounces or 39%,
comprising a 42% increase in global tonnes and a 2% decrease in Au
grade since the December 2011 estimate, excluding mining depletion.
Inata, which remains the largest component, has grown by 1.24
million ounces or 36%, comprising a 42% increase in global tonnes
and a 4% decrease in Au grade.
Inata's Mineral Resource estimate is quoted for blocks above a
nominated cut-off grade of 0.5g/t Au, depleted to the end December
2012 mining surface. The effect of different cut off grades is
shown in the charts below, with each trend (Inata and Minfo)
modeled separately (see Appendix 1 for resources by individual
pit):
[See www.avocet.co.ukfor associated graphic]
Ore Reserves estimate
The key factors affecting the Ore Reserve, together with the
work performed in each area, are discussed below. In addition,
Whittle input parameters are explained in Appendix 3.
Gold price
A gold price of US$1,200 per ounce has been applied in modeling
the Inata pit shells, compared with US$1,400 per ounce applied in
the previous reserve. As can be seen in the table below, the result
is higher grades and lower stripping ratios that make cash flow in
the next five years higher on the US$1,200 per ounce basis than on
the US$1,400 basis. Compared with the previous reserve, the overall
grade of the updated Ore Reserve has increased by 22% to 2.07 g/t
and the life-of-mine stripping ratio has reduced by 42%. The
Company may elect to apply a higher pit shell price assumption in
future.
Previous Updated reserve Selected Updated
reserve ($1,400 pit reserve
shell) ($1,200 pit shell)
---------------- --------------------
Gold price
(US$/oz.) 1,400 1,400 1,200
----------------- --------- ---------------- --------------------
Reserve grade
(g/t Au) 1.7 1.99 2.07
----------------- --------- ---------------- --------------------
Stripping ratio 15.1 n/a 8.7
----------------- --------- ---------------- --------------------
Gold ounces
(million) 1.85 1.17 0.92
----------------- --------- ---------------- --------------------
Gold recovery
Results of test work to date indicate that the recovery of gold
is primarily affected by preg-robbing nature of organic carbon in
the ore and to a lesser extent a decrease in gold liberation due to
gold lock-up in sulphides, primarily arsenopyrite. The term
"preg-robbing" refers to the presence of active carbon naturally
occurring in Inata's ore that provides an alternative surface on
which dissolved gold can attach to and therefore the gold that
adheres to this material is not recovered as part of the standard
processing route.
In order to better predict recoveries throughout the orebody,
the Company has used a system of ore characterisation for Inata
known as a Preg-Robbing Index ('PRI'), which it has then used to
estimate gold recoveries. PRI is a measure of a specific ore type's
tendency to interfere with the standard carbon-in-leach process
method through pre-robbing. Set out below is information on the PRI
index.
-- PRI determination
The PRI determination stage of the metallurgical study into the
carbonaceous ore was conducted by third party consultants ALS
Ammtec. Test work was used to build a database of PRI data for the
various ore-types at Inata, to provide an indication of the ore's
tendency to preg-rob and provide a basis for composite-sample
testing.
PRI is calculated based on the amount of gold in solution that
adsorbs, or attaches to, the carbon present in the ore rather than
the carbon added as part of the standard carbon in leach process.
PRI values range from zero to 3.4, with this upper limit
representing the known amount of gold in a spiked solution. PRI
values of less than 1 are considered as lowly preg-robbing, samples
with a value between 1 and 2.5 are considered as moderately
preg-robbing and samples producing values above 2.5 are considered
as highly preg-robbing. PRI values have been calculated for almost
5,000 individual samples across the Inata ore body.
The proportions of the updated Ore Reserve by PRI are shown in
the table overleaf. The table excludes 36,000 reserve ounces at
Filio where PRI test work is not yet complete.
PRI bracket Category % Ore Reserve % Ore Reserve
(tonnage) (ounces)
------------- --------------------- -------------- --------------
0.0-1.0 Low preg-robbing 66.6% 53.2%
------------- --------------------- -------------- --------------
1.0-2.5 Medium preg-robbing 33.0% 46.2%
------------- --------------------- -------------- --------------
2.5-3.4 Highly preg-robbing 0.4% 0.6%
------------- --------------------- -------------- --------------
-- PRI and gold recovery relationship
Composite samples were created in order to simulate various ore
blends from the Inata pits. The composite samples were tested using
methods similar to those used in the existing processing plant at
Inata in order to determine the relationship between PRI values and
gold recovery rates. As a result, the updated reserve estimate for
Inata reflects the estimate of recoveries from the existing plant
(gravity separation and carbon in leach circuits) without any plant
enhancements, and such enhancements therefore offer upside
opportunities that the Company plans to evaluate. In addition, the
test work did not assume any benefit from diesel blanking prior to
processing, which is seen as a low cost opportunity to improve
recoveries for medium and high PRI material.
The chart and table below show the resulting recovery
assumptions and the PRI relationship that have been modeled in the
current Ore Reserve.
[See www.avocet.co.ukfor associated graphic]
-- Alternative process methods
As noted above, Inata's reserves have been estimated based on
the existing process plant. However, work has been done to
understand the potential for how recoveries for high PRI ore types
could in future be improved through plant enhancements. Additional
processing methods were modeled by Lycopodium in order to establish
the optimal process flow-sheet, and these are summarised below.
- Diesel blinding of high PRI ore
Low cost amendments to the processing method with a positive
impact on recoveries, such as diesel pre-treatment of high-PRI ore,
will be implemented and represent upside to the assumptions behind
the existing reserve estimate. Test work with various methods of
diesel pre-treatment was carried out on the composites at diesel
addition levels of 500 mL per tonne of ore and 1,000 mL per tonne
of ore. The effect of pre-oxidation was also tested for both levels
of diesel addition. As expected, gold recovery from high PRI ore
improved with the diesel addition, with recovery results for
composite samples averaging 80-81%, compared to 68.5% for the same
composites tested without diesel pre-treatment.
- Sulphide flotation fine grind ("FRG")
This more capital-intensive option to process high PRI ore is
being evaluated separately. The current plant does not feature a
FRG circuit which therefore does not impact the updated reserve. It
would involve using flotation to separate sulphide material out of
the concentrate after the gravity circuit and treating it
separately from other ore being treated. Sulphide flotation
followed by leaching the tails and regrinding the concentrate to a
particle fineness of 80% passing 38 <MU>m, before leaching
with activated carbon, was performed on the master composites.
The chart below shows the relationship between PRI and gold
recovery relationship for both the existing process route (gravity
and CIL circuits) and the sulphide flotation fine grind process
route ("FRG").
[See www.avocet.co.ukfor associated graphics]
The chart indicates that a FRG process route could provide a
significant increase in gold recovery for high PRI ore, with the
fitted curve suggesting that average recoveries are closely
correlated with PRI. This is consistent with the test work findings
that, once preg-robbing is addressed, the secondary cause of lower
gold recoveries is gold locked in sulphides.
Ore hardness
While it had previously been expected that ore would become
harder as mining progressed deeper in the pits, the effect on the
update reserve of recent test work has been more severe than
anticipated, accounting for a decrease of approximately 0.2 million
ounces.
Comminution test work was conducted to determine the hardness of
ore. This is achieved by measuring the amount of grinding energy
(expressed in kWh per tonne) needed for each type of ore to reduce
it to the size needed for the gravity and CIL circuits. Ore types
with differing hardness are measured on a scale known as the Bond
Work Index, where a high number denotes harder ore. The test work
aimed at understanding the variability of hardness throughout the
ore body. It also aimed at deriving design parameters for a
potential new comminution circuit, either as part of an expansion
or as an enhancement to the existing plant. Since the test work
programme, an expansion has been ruled out by the Company as
uneconomic at the present time; this situation will be reviewed as
new processing data becomes available and exploration continues to
delineate additional ounces.
All tests were conducted at ALS Ammtec and an interpretation was
provided by Orway Mineral Consultants ('OMC'). The new test work
data provided to OMC suggested an increase in Bond Work Index
assumptions used in the previous reserve estimate for the fresh ore
from 13.6 to 17.1 kWh/t. Corresponding values for the oxide and
transitional material are 10.5 and 14.3 kWh/t respectively.
Based on the energy requirements for fresh ore, a plant
throughput of up to 153 tonnes per hour was predicted by OMC,
equating to 1.2 million tonnes per annum at an average plant
availability of 90%. In this scenario the circuit is limited by the
grinding capacity. For transitional ore, a plant throughput of up
to 203 tonnes per hour is predicted, which equates to 1.6 million
tonnes per annum assuming an average 90% availability.
For the life of mine plan contained in this announcement, annual
throughout levels have been determined taking into account the
blend of ore types. Based on test work data received to date, it
has also been assumed in the modeling process that transitional ore
higher in the pits will be softer than transitional ore deper in
the pits. Further comminution test work is in progress to provide
more clarity on ore hardness through the orebody.
The following table shows the proportion of each ore type in the
Ore Reserve, both in terms of tonnes and contained ounces.
Material type % Ore Reserve % Ore Reserve
(tonnage) (ounces)
------------------------ -------------- --------------
Oxide 50.7% 39.4%
------------------------ -------------- --------------
Transitional 42.7% 48.9%
------------------------ -------------- --------------
Fresh 6.6% 11.6%
------------------------ -------------- --------------
Costs
Compared with the previous reserve, cost increases account for
only approximately 5% of the decrease in reserve ounces. The cost
assumptions used in the Ore Reserve update are shown below.
-- Mining costs
Differential haulage costs have been used for each mining area,
and for ore versus waste, in order to reflect variation in haulage
profiles. A default reference cost of US$1.39/tonne was calculated
based on the waste mining cost at Sayouba pit, as this is taken to
be the centroid. A bench-by-bench Mining Cost Adjustment Factor
(MCAF) of US$0.027161/t per 10m depth was applied to the reference
mining cost. This factor was determined from historical cost
increases per bench at Inata. A separate haulage MCAF was
calculated for each mining area to assign varying costs to each
mining area due to changes in haulage distance. These factors are
displayed in the table on the right below.
[See www.avocet.co.ukfor associated graphics]
-- Processing costs
The total processing cost applied to the pit optimisations
varies with the material type processed. The table below
illustrates these costs.
[See www.avocet.co.ukfor associated graphics]
Life-of-mine plan
The table below shows the latest life-of-mine plan for Inata,
based on the updated Ore Reserve estimate.
[See www.avocet.co.ukfor associated graphics]
The above life-of-mine plan is based on pit shells optimised at
US$1,200 per ounce. It includes reserve ounces from the expanded
Inata mining licence area only, and excludes Souma.
It also assumes no improvements to the current processing plant,
with capex assumed at sustaining levels only (US$20m in 2013
including the construction of the second tailings dam and purchase
of rebuild kits for the mine fleet, US$7m per annum 2014--2016, and
approximately US$2m per annum for maintenance and restoration work
thereafter).
The Company is undertaking test work on fresh ore samples and is
reviewing the opportunities to improve throughputs and recoveries
through enhancement capex, where returns are sufficiently high.
In addition to the projections shown above, the Avocet Group
anticipates Corporate and Head Office expenditure of US$8--10m per
annum. SMB is subject to a corporation tax rate of 17.5% charged on
taxable profits. Taxable profits are calculated after taking into
account the impact of capital allowances, interest on group loans
extended for the construction of the mine and other fees.
Mining of ore is scheduled at a rate greater than processing in
years 2013-2016 in order to stockpile material, the processing of
which requires a specific ore feed blend of material that accounts
for grade, PRI and ore hardness that will ensure predicted
recoveries are achieved. Stockpiling will provide the flexibility
for the Company to achieve this ore feed blend. As part of the
ongoing scheduled maintenance of the Inata plant, the Company
intends to carry out maintenance on the SAG mill in the coming
months and this proactive approach will require a plant shutdown.
This activity is factored into the Company's guidance for 2013 and
therefore production and cash cost guidance for the year remain
unchanged.
Appendix 1: Inata Mineral Resources by pit
As at 31-Dec-12
================ ========================
Area Class Tonnes Grade Ounces
================
(g/t
(Mt) Au) (x000)
Inata mining licence Inata North Measured 8.9 1.74 498
====================== ================ =========== ======= ====== =======
Indicated 24.2 1.28 996
=================================================== ======= ====== =======
M & I 33.1 1.40 1,495
=================================================== ======= ====== =======
Inferred 11.3 1.36 494
Subtotal 44.4 1.39 1,989
=================================================== ======= ====== =======
Inata Central Measured 5.4 1.66 286
================ ================================== ======= ====== =======
Indicated 5.8 1.53 287
=================================================== ======= ====== =======
M & I 11.2 1.59 573
=================================================== ======= ====== =======
Inferred 5.3 1.19 203
Subtotal 16.5 1.46 776
=================================================== ======= ====== =======
Inata South Measured 1.2 1.33 51
================ ================================== ======= ====== =======
Indicated 6.9 1.29 284
=================================================== ======= ====== =======
M & I 8.0 1.30 335
=================================================== ======= ====== =======
Inferred 5.6 1.36 242
Subtotal 13.6 1.32 577
=================================================== ======= ====== =======
Sayouba Measured 0.4 1.43 20
================ ================================== ======= ====== =======
Indicated 2.3 1.12 81
=================================================== ======= ====== =======
M & I 2.7 1.17 101
=================================================== ======= ====== =======
Inferred 0.8 1.10 28
Subtotal 3.5 1.15 128
=================================================== ======= ====== =======
Minfo Measured 2.3 1.81 136
================ ================================== ======= ====== =======
Indicated 4.7 1.34 203
=================================================== ======= ====== =======
M & I 7.0 1.50 338
=================================================== ======= ====== =======
Inferred 10.2 1.23 403
Subtotal 17.2 1.34 741
=================================================== ======= ====== =======
Subtotal
(Inata mining
licence) Measured 18.2 1.69 991
================ ================================== ======= ====== =======
Indicated 43.8 1.31 1,851
=================================================== ======= ====== =======
M & I 62.1 1.42 2,842
=================================================== ======= ====== =======
Inferred 33.1 1.29 1,370
Subtotal 95.2 1.38 4,212
=================================================== ======= ====== =======
As at 31-Dec-12
================= ========================
Area Class Tonnes Grade Ounces
=================
(Mt) (g/t Au) (x000)
Inata
Surrounds Filio Measured 0.6 1.72 36
=========== ================= ========== ====== ======== ======
Indicated 0.9 1.20 35
======================================== ====== ======== ======
M & I 1.5 1.42 70
======================================== ====== ======== ======
Inferred 2.6 1.18 99
Subtotal 4.2 1.26 170
======================================== ====== ======== ======
Ouzeni Measured
================= ========== ====== ======== ======
Indicated
================= ========== ====== ======== ======
M & I
========== ====== ======== ======
Inferred 3.9 1.25 159
Subtotal 3.9 1.25 159
======================================== ====== ======== ======
Pali Measured
================= ========== ====== ======== ======
Indicated
================= ========== ====== ======== ======
M & I
========== ====== ======== ======
Inferred 3.1 1.52 151
Subtotal 3.1 1.52 151
======================================== ====== ======== ======
Subtotal (Inata
surrounds) Measured 0.6 1.72 36
================= ====================== ====== ======== ======
Indicated 0.9 1.20 35
======================================== ====== ======== ======
M & I 1.5 1.42 70
======================================== ====== ======== ======
Inferred 9.7 1.32 409
Subtotal 11.2 1.33 479
======================================== ====== ======== ======
Total (Inata
plus Surrounds) Measured 18.9 1.69 1,027
================= ====================== ====== ======== ======
Indicated 44.7 1.31 1,886
======================================== ====== ======== ======
M & I 63.6 1.42 2,912
======================================== ====== ======== ======
Inferred 42.8 1.29 1,779
Subtotal 106.4 1.37 4,691
======================================== ====== ======== ======
Appendix 2: Inata Ore Reserves by pit
As at 31-Dec-12
========== ========================
Area Class Tonnes Grade Ounces
==========
Inata
North Proven 3.9 2.44 307.4
============ ======= ====== =======
Probable 1.1 3.11 111.8
Subtotal 5.0 2.59 419.2
======================= ======= ====== =======
Inata
Central Proven 2.6 1.91 158.8
============ ======= ====== =======
Probable 0.2 1.20 8.2
Subtotal 2.8 1.85 167.0
======================= ======= ====== =======
Inata
South Proven 0.3 2.25 20.3
============ ======= ====== =======
Probable 0.2 1.46 8.9
Subtotal 0.5 1.93 29.2
======================= ======= ====== =======
Inata
Far
South Proven 0.0 0.00 0.0
============ ======= ====== =======
Probable 0.6 2.49 48.0
Subtotal 0.6 2.49 48.0
======================= ======= ====== =======
Sayouba Proven 0.4 1.58 18.6
============ ======= ====== =======
Probable 0.3 1.47 16.1
Subtotal 0.7 1.53 34.6
======================= ======= ====== =======
Minfo Proven 1.9 1.94 117.4
============ ======= ====== =======
Probable 1.0 1.49 45.9
Subtotal 2.8 1.79 163.3
======================= ======= ====== =======
Filio Proven 0.4 1.79 22.8
============ ======= ====== =======
Probable 0.3 1.25 11.9
Subtotal 0.7 1.56 34.7
======================= ======= ====== =======
Total Proven 9.4 2.13 645.2
========== ============ ======= ====== =======
Probable 3.7 2.10 250.8
Stockpiles 0.6 1.00 19.1
======================= ======= ====== =======
Total 26.3 2.07 915.2
======================= ======= ====== =======
Ore Reserves were estimated using a gold price assumption $1,200
per ounce. Figures shown above are gross (100%) with 90% are
attributable to Avocet. The government of Burkina Faso holds the
remaining 10%.
The Inata Gold Mine Open Pits contain 569kt of Inferred material
with a grade of 1.54 g/t Au.
Appendix 3 - Whittle Input parameters
The following pages detail the Whittle parameters used in that
particular optimisation process that was carried out for the Inata
LOM Mining Study. It should be noted that all the below parameters
remained the same for all optimisations apart from the alteration
of the gold price.
Slope Sets
Slope set input parameters for Whittle were gathered from the
geotechnical report Geotechnical Assessment of Inata Mine Slopes"
(see Appendix 5) which was compiled by SRK Consulting Ltd. An
inter-ramp slope angle of 45 degrees was used for the Whittle
optimisation as was recommended in the above report. The total
slope angles for the various pits were then determined by expected
ramp layouts.
Study Base Date
The bulk of this LOM Study was carried out in the last quarter
of 2012 and all supplied costs and revenues used and output
resulting from this study must be referred to this period.
Initial Capital
No CAPEX costs were included in the optimisation and as such do
not influence the selection of the optimal pit shell.
Plant Capacity
The plant capacity was set at 2.7Mtpa for oxide material in the
Whittle optimisation based on Inata historical data. The plant
capacity was set at 1.6Mtpa for transitional material and 1.2Mtpa
for fresh material in the Whittle optimisations based on
recommendations from Lycopodium.
Mining Limit
A mining limit of 41,500,000 tonnes per annum was applied to the
optimisation to reflect the average overall yearly fleet production
capacity over the entire life of the project. This limit is based
on the current 100t fleet set up with the addition of the hired
fleet.
Processing Recovery
A PRI dependent process recovery formula was determined which
was implemented in Whittle. This formula was based on a combination
of metallurgical test work data and historical Inata recovery data
(Figure 58). Based on this data, a recovery of 90% was applied to
all oxide material irrespective of PRI and to all Transitional and
Fresh material with a PRI<=1. The PRI dependant process recovery
formula was applied to all Transitional and Fresh material with a
PRI>1. Table 42 below displays the recovery formulas applied to
the three material types processed.
Grade Cut-Off
One of the necessary variables in allowing the determination of
the economic cut-off for a project is a constant processing
recovery. Due to the supplied processing recovery formula, no set
cut off could be calculated since in this case the recovery is
grade dependent. Therefore, the Whittle optimisations were run
using the cash flow method. In this method, a block of 'ore' (ie:
economic to process) is determined by comparing the cash flow which
would be produced by processing it to the cash flow which would be
produced by mining it as waste. If the cash flow from processing it
is higher, the material is treated as ore. If not, it is treated as
waste.
Mining Dilution
A 5% mining dilution factor was applied to the project within
Whittle to account for dilution that may be expected to occur
during the course of mining due to the mixing of ore and waste
material during blasting and excavation processes. This figure was
determined by historical figures from the mine.
Mining Recovery
A 97.5% mining recovery factor was applied to the project within
Whittle to account for the amount of ore that might be lost due to
spillage and/or re-handling. It also accounts for any unforeseen
additional ore losses (ore trammed to waste dump, etc). This figure
was determined by historical figures from the mine.
Commodity Price
The base case gold price utilised was $1,200 per ounce. A
Royalty of 6.3% was applied to the gold price.
Discount Rate
A discount rate of 10% was used for the optimisation; implicit
time costs were applied.
This information is provided by RNS
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