TIDMASA
RNS Number : 9106F
ASA Resource Group PLC
17 November 2015
Quarterly update
17 November 2015
(Q2 FY2016 - quarter ended 30 September 2015)
Asa Resource Group PLC
("Asa Resource", the "Group" or the "Company")
Asa Resource is pleased to provide an update on operations and
exploration activity for the quarter ended 30 September 2015.
OPERATIONAL HIGHLIGHTS
Gold - Freda Rebecca Gold Mine (Zimbabwe)
-- Tonnes milled increased by 5% to 309,102t in Q2 FY2016 (Q1 FY2016: 293,759t)
-- The average feed grade for Q2 FY2016 increased by 6% to 2.15g/t (Q1 FY2016: 2.03g/t)
-- Gold recovery rate for Q2 FY2016 increased by 2 percentage
points to 84% (Q1 FY2016: from 82%)
-- 18,067oz of gold produced in Q2 FY2016 (Q1 FY2016: 16,985t).
The 6.4% production increase was mainly attributable to
improvements in feed grade, tonnes milled and recoveries
-- C1 cash costs were 7% lower in the quarter under review at
US$870/oz (Q1 FY2016: US$930/oz). All-in sustaining C3 costs were
reduced by 6% to US$1,023/oz (Q1 FY2016: US$1,093/oz)
-- The average gold price received in Q2 FY2016 was US$1,121/oz (Q1 FY2016: US$1,186/oz)
Nickel - Trojan Nickel Mine (Zimbabwe)
-- Production of nickel in concentrate rose in Q2 FY2016 by 7%
to 1,442t (Q1 FY2016: 1,349t), primarily due to an increase in
average head grade and recoveries
-- Head grade was 31% higher at 1.62% (Q1 FY2016: 1.24%)
-- Recovery was 4% higher at 87.6% (Q1 FY2016: 84.0%)
-- The average net realised nickel in concentrate price was
US$6,847/t (Q1 FY2016: US$8,461/t), reflecting a 19% fall in global
nickel prices this quarter
-- Nickel sales were 18% higher at 1,494t (Q1 FY2016: 1,267t)
-- C1 cash costs for nickel in concentrate dropped by 23% to
US$6,895/t (Q1 FY2016: US$8,901/t), and all-in sustaining C3 costs
of nickel in concentrate dropped by 23% to US$7,539/t (Q1 FY2016:
US$9,736/t)
Diamonds - Klipspringer (South Africa)
-- Klipspringer's throughput of Marsfontein fine residue
tailings increased by 36% to 52,797t (Q1 FY2016: 38,760t)
-- Diamonds recovered improved by 118% to 37,385cts (Q1 FY2016: 17,176cts)
-- Diamond sales increased by 102% quarter-on-quarter to 34,560cts (Q1 FY2016: 17,099cts)
-- The price received for fine diamonds produced by the mine
fell by 8% quarter-on-quarter from $16.62/ct (Q1 FY2016:
$18.11/ct). This was in line with market conditions
EXPLORATION HIGHLIGHTS
Gold - Zani-Kodo (Democratic Republic of Congo - DRC)
-- Exploration activity was focused in field assessment of
several target areas, and two new targets, Kepira and Kodo West,
have been identified with two potentially mineralised zones
present
Copper/Cobalt - SEMHKAT/Hailiang JV (Democratic Republic of
Congo - DRC)
-- Exploration programmes are in progress at Kawesitu, Mwombe, Kibolwe East, Lufira and PR763
Mr Yat Hoi Ning, the Company's Executive Chairman commented:
With new management now firmly in place, operations during the
financial year's second quarter have started to improve with gold
production 5% higher quarter on quarter at the Freda Rebecca mine
and nickel concentrates 7% higher at Bindura Nickel's Trojan mine.
I remain confident that this pattern of steady improvement will
persist until operating targets are reached.
At both mines the operational focus has been on containing or
reducing unit costs in response to weakening metal prices and grade
control - and this will be our strategy while prices remain
depressed and after they recover to more-acceptable levels.
We have achieved these results by implementing a new mining plan
at Trojan and improved grade control at Freda Rebecca. At the same
time, the operating and overhead costs have been strictly
controlled, again a process that will continue as metal prices move
through and out of their current trough. The immediate, near-term
outlook is for further price challenges.
On 29 September 2015, the Company successfully raised GBP2.92
million before expenses through an Open Offer. The proceeds from
which have been used to further develop the Klipspringer diamond
operation and general corporate purposes.
The company's new name, Asa Resources Group PLC, which reflects
a broadening of our developmental horizons, has, I believe,
inspired our people. Their initiative is again reflected in the
past quarter's achievements in what have been difficult market
conditions.
For further information please visit www.asaukplc.com or
contact:
Asa Resource Group PLC:
Yim Kwan, Finance Director or
Amilha Young, Group General Counsel and Company Secretary
Tel: +44(0) 20 3696 5470
Nominated Adviser
Grant Thornton UK LLP
30 Finsbury Square, London EC2P 2YU
Colin Aaronson/Richard Tonthat/Carolyn Sansom
Tel: +44 (0) 20 7383 5100
Financial Adviser and Corporate Broker
Cantor Fitzgerald Europe
1 Churchill Place, Canary Wharf, London E14 5RB
Stewart Dickson/Jeremy Stephenson /Patrick Pittaway
Tel: +44 (0) 20 7894 7000
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 (Zimbabwe)
Freda Rebecca Quarter Quarter Quarter Quarter
Gold Mine ended ended ended ended
Sept 2015 June 2015 March 2015 Dec 2014
------------------ ------ ---------- ---------- ----------- ---------
Tonnes mined t 336,026 351,202 256,459 296,085
------------------ ------ ---------- ---------- ----------- ---------
Tonnes milled t 309,102 293,759 297,953 322,216
------------------ ------ ---------- ---------- ----------- ---------
Head grade g/t 2.15 2.03 1.81 1.89
------------------ ------ ---------- ---------- ----------- ---------
Recovery % 84 82 83 76
------------------ ------ ---------- ---------- ----------- ---------
Gold sales oz 18,067 16,985 13,443 14,298
------------------ ------ ---------- ---------- ----------- ---------
Average gold
price received US$/oz 1,121 1,186 1,223 1,195
------------------ ------ ---------- ---------- ----------- ---------
Cash cost (C1) US$/oz 870 930 1,234 1,118
------------------ ------ ---------- ---------- ----------- ---------
All-in sustaining
cost (C3) US$/oz 1,023 1,093 1,430 1,304
------------------ ------ ---------- ---------- ----------- ---------
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
-- C3 all-in sustaining cost reflects C1 costs plus depreciation
and amortisation, thus incorporating the capital cost of production
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 declined by 4% to
336,026t from 351,202t in Q1 FY2016. The reduced tonnage was due to
lower availability of loading and hauling fleet.
Q2 FY2016 gold production increased by 6% to 18,067oz compared
to 16,985oz in the previous quarter as a result of increases in
feed grade, milled tonnes and recovery. Tonnes milled rose by 5% to
309,102t in Q2 FY2016 (Q1 FY2016 - 293,759t) on the backdrop of a
6% increase in mill running time.
The feed grade for Q2 FY2016 increased by 6% to 2.15g/t from
2.03g/t in Q1 FY2016. The increase in feed grade is due to better
ore body definition as established by the infill evaluation
drilling.
Gold recovery rate for Q2 FY2016 increased by 2 percentage
points to 84% from 82% in the previous quarter. The increase is
attributable to the increase in feed grade and reduction in loss of
fine carbon to tailings.
C1 cash costs for the quarter under review decreased by 6% to
US$870/oz from US$930/oz in Q1 FY2016. The drop in C1 cash cost is
attributable to a 6% increase in gold production. The all-in
sustaining costs decreased by 6% from $1,093/oz in Q1 FY2016 to
$1,023/oz.
Nickel - Trojan Nickel Mine (Zimbabwe)
Trojan Mine Quarter Quarter Quarter Quarter
ended ended ended ended
Sep 2015 Jun 2015 Mar 2015 Dec 2014
------------------ ----- --------- --------- --------- ---------
Tonnes mined t 95,802 130,492 142,582 155,129
------------------ ----- --------- --------- --------- ---------
Tonnes milled t 101,701 129,523 140,045 148,712
------------------ ----- --------- --------- --------- ---------
Head grade % 1.62 1.24 1.669 1.156
------------------ ----- --------- --------- --------- ---------
Recovery % 87.6 84 86.9 80.5
------------------ ----- --------- --------- --------- ---------
Ni in concentrate t 1,442 1,349 2,032 1,383
------------------ ----- --------- --------- --------- ---------
Nickel sales t 1,494 1,267 2,072 1,395
------------------ ----- --------- --------- --------- ---------
Average nickel
price US$/t 6,847 8,461 9,489 10,313
------------------ ----- --------- --------- --------- ---------
Cash cost (C1) US$/t 6,895 8,901 6,926 10,666
------------------ ----- --------- --------- --------- ---------
(MORE TO FOLLOW) Dow Jones Newswires
November 17, 2015 02:00 ET (07:00 GMT)
All-in sustaining
cost (C3) US$/t 7,539 9,736 7,209 11,491
------------------ ----- --------- --------- --------- ---------
Figures shown are unaudited and may vary upon final audit.
-- C1 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 C3 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
Mined tonnage was 27% lower at 95,802t (Q1 FY2016: 130,492t).
Milled tonnage was mostly affected by, planned shutdown in July due
to service winder upgrade, limited number of active draw points,
longer scooping cycles and locomotives breakdown. Production is
expected to increase in the third quarter following adoption of 30K
production plan driven by a focus on massive extraction.
Head grade was 31% higher at 1.62% (Q1 FY2016: 1.24%) this was
mainly due to deliberate focus on moving high grade areas such as
massive in 37-1L and pod in 33-1L during the month of August and
September.
Nickel recovery was 4% higher at 87.6% (Q1 FY2016: 84%) due to
increased sulphide nickel in high grade ore coupled with steady
plant conditions during the quarter. Nickel production was 7%
higher at 1,442t (Q1 FY2016: 1,349t) due to high grade ore treated
compared to the previous quarter.
Average nickel price recovered decreased by 19% to US$6,847 (Q1
FY2016: $8,461). Nickel prices continue to decrease during the
quarter. Analysts do predict an improvement in the nickel price as
demand is expected to increase though the timing of this is
unknown.
C1 cash costs of nickel in concentrate dropped by 23% to
US$6,895/t from US$8,901/t Q1 FY2016, and all-in sustaining C3
costs of nickel in concentrate dropped by 23% to US$7,539/t in the
quarter under review, from US$9,736/t in Q1 FY2016. This was as a
result of higher nickel metal production, a reduction in quantity
of ore mined and processed. The above was driven by a focus on an
increase in mining high grade areas, which resulted in a decrease
in variable costs and the production of more metal at a lower unit
cost. Furthermore, the company has also implemented cost reduction
initiatives to combat the lower nickel prices.
Diamonds - Klipspringer (South Africa)
Klipspringer Quarter Quarter Quarter Quarter
Mine ended ended ended ended
Sep 2015 Jun 2015 Mar 2015 Dec 2014
---------------- ------- --------- --------- --------- ---------
Tonnes treated t 52,799 38,762 43,504 49,939
---------------- ------- --------- --------- --------- ---------
ROM diamonds
recovered carats 37,385 17,176 17,870 31,850
---------------- ------- --------- --------- --------- ---------
Diamond sales carats 34,560 17,099 11,748 44,200
---------------- ------- --------- --------- --------- ---------
Average diamond
price US$/ct 16.62 18.11 19.50 19.31
---------------- ------- --------- --------- --------- ---------
Commentary
-- The tonnages mined at Klipspringer improved due to rationalisation of mining and haulage
-- The diamonds recovered increased due to improved delineation
of the coarse tailings material
-- The diamond price received remained static which reflects the current market conditions
-- An ongoing review of the Klipspringer operations including
the feasibility of re-opening the underground fissure mine is in
progress
EXPLORATION
Gold - Zani-Kodo (Democratic Republic of Congo - DRC)
-- Exploration activity was focused in field assessment of several target areas
-- Two new targets, Kepira and Kodo West have been identified
with two potentially mineralized zones present
-- Orientation grab sampling has been carried out in both areas
with fieldwork and data compilation is ongoing
Copper/Cobalt - SEMHKAT/Hailiang JV (Democratic Republic of
Congo - DRC)
Exploration programmes are in progress at Kawesitu, Mwombe,
Kibolwe East, Lufira and PR763.
The following work had been completed during the quarter:
Kawesitu
-- 13 Shallow drill holes were completed for a total of 271m
-- Diamond drilling is ongoing with four holes completed for a total of 943m
-- No results have been received to date
Mwombe (PR741)
-- Three prospects were identified in Mwombe by Hailiang, so
called Small Zone, Mwombe West and Mwombe East:
-- Small Zone
o Geological mapping, soil gridding and profiling followed by
trenching and IP sounding were conducted to identify the drill
targets
o Six diamond holes were drilled for a total of 1,222m
o Two zones of copper mineralization were intersected with
encouraging results
-- Mwombe West
o Geological mapping followed by trenching and IP sounding were
conducted
-- Mwombe East
o Geological mapping, soil gridding and profiling followed by
trenching and IP sounding were carried out
Lufira (PR756)
-- Exploration programmes completed during the reporting period
-- Geological mapping and drilling have confirmed that the
existence of Lower Roan Formation, but no significant
mineralization was intersected
ABOUT ASA RESOURCE GROUP PLC
Asa Resource Group Plc is a pan-African resources company with
operations in Zimbabwe and South Africa, and a broad range of
exploration projects and interests in the Democratic Republic of
Congo (DRC), Angola and Botswana.
In September 2015 the Company changed its name from Mwana Africa
plc to Asa Resource Group Plc to better reflect the Company's
global strategy. The Group has a diverse asset base, including
gold, nickel, copper, cobalt and diamonds and intends to diversify
and reorganize its business along commodity lines as well as
stimulating growth through global investment.
The group's primary listing is on the London Stock Exchange's
AIM market and enjoys the strategic advantage of having supportive
and influential shareholders in China. While the Company has been
built on mining in Zimbabwe and South Africa, it is intended that
its interests will be diversified beyond mining as well as
geographically.
-- In Zimbabwe, Asa's interests are the Trojan and Shangani
nickel mines and the Freda Rebecca gold mine. Asa's nickel and gold
projects include Hunter's Road and Maligreen, with the Makaha
deposit being a gold exploration prospect.
-- The Freda Rebecca gold mine in Zimbabwe restarted operations
in 2009 and in the 12 months ended September 2015, produced
58,714oz of gold.
-- The Trojan nickel mine is owned by Asa's Zimbabwe subsidiary
Bindura Nickel Corporation (BNC). After a four-year period of being
under care and maintenance, in 2012 BNC carried out a US$23m
restructuring and recapitalisation programme which allowed it to
restart the Trojan mine. The first sale of nickel concentrate to
Glencore plc took place in April 2013. In the 12 months ended
September 2015, BNC produced 7,306t of nickel.
-- In the DRC, Asa has exploration programmes in Zani-Kodo
(gold), Katanga (copper) and a 20% stake in Société Minière de
Bakwanga (diamonds).
-- In the Katanga Province, Asa has a Joint Venture with
Zhejiang Hailiang Company Limited to jointly explore for copper
within the licensed areas. The Katanga concessions are otherwise
known as SEMHKAT (Société d'Exploration Minière du Haut
Katanga).
-- The Zani-Kodo joint venture project has a JORC compliant gold mineral resource of 2.97Moz.
-- Klipspringer diamond mine is Asa's South African interest.
Asa holds a 69.77% interest in Klipspringer and although the mining
operations are temporarily on care and maintenance, the tailings
retreatment plant is in production. The viability of underground
mining is being investigated.
Qualified Person
The information presented here that relates to Mineral Resources
of the Kodo, Badolite, Zani Central and Lelumodi deposits is based
on information compiled by Dr Colin Porter, who is a full time
employee of Mwana Africa, has a PhD in geology, is a Member of the
Australasian Institute of Mining and Metallurgy (AusIMM), and has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity they are undertaking to qualify as Competent Persons as
defined in the 2012 Edition of the 'Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves (JORC
Code 2012)'.
(MORE TO FOLLOW) Dow Jones Newswires
November 17, 2015 02:00 ET (07:00 GMT)
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