TIDMALO
RNS Number : 9933U
Alecto Minerals PLC
13 April 2016
Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector:
Mining
13 April 2016
Alecto Minerals plc ('Alecto' or the 'Company')
Results of Matala Feasibility Study
and
Agreement to Arrange Vendor Financing for the Matala Gold
Project
Alecto Minerals plc (AIM: ALO), the Africa-focussed gold and
base metal exploration and development company, is delighted to
announce that, following positive results from a feasibility study
('FS') on its wholly-owned Matala gold project in Zambia ('Matala'
or the 'Matala Gold Project'), it has signed an agreement pursuant
to which the Company is working with Yantai Xinhai Machinery Co.
Ltd ('Xinhai') and PenMin (Pty) Ltd ('PenMin') with respect to the
proposed construction and financing of mining operations at Matala.
This latest milestone is in line with the Company's stated strategy
to deliver gold production from the project as quickly as
practicable.
Highlights:
-- PenMin has delivered a FS on Matala demonstrating positive
economics for a 400,000 tonnes per annum ('tpa') oxide and
transitional open pit operation with a mine life of approximately 4
years 8 months at $1,200/oz Au with exploration upside and
underground potential:
- Estimated capital cost for plant and infrastructure of US$14.4 million
- Project NPV of US$28.6 million at an 8% discount rate
- Unlevered project IRR of 52%
-- Agreement of all parties to enter into a proposed Design,
Build and Operate ('DBO') contract under International Federation
of Consulting Engineers ('FIDIC') 'Gold Book', 2008, standards for
the process plant and associated infrastructure
- FIDIC contracts have been developed over 50 years as the
international standard for the Consulting Industry. They are
recognised and used globally in many jurisdictions, on all types of
projects (www.fidic.org)
-- Xinhai has agreed to arrange Vendor Financing for the DBO
contract having confirmed that it is satisfied with the technical
and financial outcomes of the FS
-- PenMin shall be appointed Employer's Representative under a
FIDIC 'White Book' Client / Consultant Agreement
-- During the operational phase, Xinhai and PenMin will jointly
manage the plant's operations, the control of which will be
transferred to Alecto on conclusion of the term of the contract
-- Proposed Vendor Financing will be by way of a loan - Alecto
will therefore remain the sole owner of the project
-- Financing, asset procurement and operating agreements remain
subject to agreement on pricing and detailed contractual terms
Mark Jones, CEO of Alecto, commented:
"The signing of this agreement and, more importantly, the
commitment from Xinhai to arrange Vendor Financing, de-risks the
Matala Gold Project significantly and is testament to the excellent
opportunity that the project represents for stake holders. In
recent months, we have developed a strong relationship with both
PenMin and Xinhai that has provided Alecto with the confidence we
need to partner with them in both the development and operational
phases of the project. There remains a lot of hard work to be done
before we can commence development on the ground, but considering
how far we have come since the acquisition was completed just 5
months ago, I am confident that we will deliver further progress in
the months ahead."
Additional Information
The historic Matala Gold Project is located in a licence area of
south-central Zambia dominated by the Mwembeshi Shear Zone, which
incorporates the geologically complex Matala Dome, an elongated
east-northeast Dome parallel, or sub-parallel, to the trend of the
shear. The single 32km(2) 25 year renewable mining licence (licence
8074-HQ-LML) was granted by the Ministry of Mines in Zambia in 2003
and reinstated in December 2014 (the 'Licence'). It also covers the
Company's wholly owned Dunrobin Mine.
Gold mineralisation has been identified at multiple locations
across the Matala Dome, and specifically within the licence area.
At Matala, gold mineralisation is characterised by strong
stratigraphic deformation, shearing and the presence of
quartz-dolomite-pyrite-tourmaline-albite-sericite alteration and
vein stockworks. The mineralised assemblages occur in steep
south-dipping stockwork.
Matala contains an estimated 568,000 oz Au JORC Code compliant
resource estimate in the Indicated and Inferred categories and was
subject to limited historical underground mining during the
pre-independence years in Zambia. In addition, on 2 March 2016 the
Company announced that a confirmatory sampling programme conducted
at Matala had validated an historic report produced in 1984, which
was issued by the Zambian Industrial and Mining Corporation and
estimated that an additional 75,000 tonnes of measured non-code
compliant mineral resources exist in recently identified historic
dumps and tailings adjacent to the Matala deposit.
Alecto has identified the potential to develop a low-cost,
profitable, small-scale 400,000 tonnes per annum open-pit mining
operation at Matala and its satellite deposits, targeting the oxide
and transitional ore and using a simple crushing, milling and
gravity circuit with subsequent direct cyanidation.
With this in mind, Alecto appointed PenMin in December 2015 to
provide consultancy services on Alecto's 100% owned Matala Gold
Project in Zambia. Pursuant to that arrangement the Company and
PenMin have successfully completed:
-- Technical and commercial evaluation of potential EPC
suppliers and operational contractors, with specific reference to
their ability to provide vendor financing
-- Preparation of the FS on the Matala Gold Project, targeting
the oxide resources defined in Coffey Mining's JORC compliant
resource estimate
-- A detailed development route and associated planning for the Matala Gold Project
At the end of January 2016, Alecto and PenMin jointly completed
an audit visit to Xinhai in China, to establish the potential for
partnering with Xinhai on the development of Matala. Xinhai is a
privately owned, global leader and pioneer of EPC services in
China. A specialist in mineral processing plants, its expertise
extends to mineral testing, engineering design, equipment
manufacture, installation, training and commissioning. Xinhai have
completed more than 400 global EPC mining projects for both foreign
and Chinese companies (see www.xinhaimining.com for further
details).
Alecto has satisfied itself that Xinhai has the necessary
technical and commercial capability to perform the design, build
and operational services that are required to bring Matala into
future production.
PenMin completed and submitted an initial FS at the end of
January 2016 to meet the needs of Xinhai and Chinese finance
houses. Following its own detailed technical and commercial review,
Xinhai is now satisfied as to the technical and financial outcomes
of the FS.
The key outputs from the FS for the assumed life of mine are
summarised below:
Gross Revenue 192,477,826
Less: Off-mine Cost (11,631,797)
Less: Sales Commission (2,887,167)
--------------------------------- ---------------
Net Revenue 177,958,862
Less: Operating Cost (104,897,578)
Less: Closure Cost Provision (1,789,735)
Less: Capital Maintenance (1,511,386)
Cash from operations 69,760,163
Interest Received 1,951,669
--------------------------------- ---------------
Profit Before Tax 71,711,832
Less: Taxation Paid 10,659,791
--------------------------------- ---------------
Profit After Tax 61,052,041
Less: Working Capital Movement -
--------------------------------- ---------------
Less: Capital Cost (15,535,252)
Debt Draw Down 13,221,841
Debt Repayment (15,389,784)
Net Project Cash Flow 43,348,845
================================= ===============
Key Financial Measures:
Project NPV (8% discount rate) $28,592,203
Project IRR (unlevered) 52%
Payback Duration 31 months
**ENDS**
For further information, please visit www.alectominerals.com,
follow us on Twitter @AlectoMinerals, or contact:
Alecto Minerals plc Tel: +44 (0)20 7499 5881
Mark Jones
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Andrew Emmott
Matthew Chandler
James Dance
Beaufort Securities Limited Tel: +44 (0)20 7382 8300
Jon Belliss
St Brides Partners Limited Tel: +44 (0)20 7236 1177
Elisabeth Cowell
Charlotte Heap
Notes to editors:
Alecto Minerals plc is an African focussed, gold and base metal
exploration and development company quoted on AIM with gold
exploration projects in Zambia, Mali, Burkina Faso and
Mauritania.
In Zambia, the historic Matala and Dunrobin gold mines have, in
aggregate, a 760,000 oz Au JORC Code compliant resource estimate in
the Measured, Indicated and Inferred categories at an average grade
of 2.3g/t Au. The Company is focused on seeking to bring Matala
into low-cost production in the near to mid-term.
In Mali, the Kossanto East project has an inferred JORC Code
compliant resource estimate of 6.72Mt grading at 1.14g/t Au for an
aggregate of 247,000 oz Au with a cut-off grade of 0.5g/t Au. This
is currently the subject of a co-operation agreement with TSX
listed Desert Gold Inc. to evaluate the potential to jointly
develop each company's neighbouring projects into production. The
Kossanto West project is subject to a joint venture agreement with
Randgold Resources (Mali) Limited.
Alecto also owns the Kerboulé Project, located in the highly
prospective Birrimian-age Djibo gold belt in northern Burkina Faso,
as well as the wholly owned Wad Amour IOCG Project in Mauritania
which is at an exploration stage.
(MORE TO FOLLOW) Dow Jones Newswires
April 13, 2016 02:00 ET (06:00 GMT)
Accordingly, the Company has a strong, diversified project
portfolio with exciting exploration upside potential.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGMGMDNZZGVZM
(END) Dow Jones Newswires
April 13, 2016 02:00 ET (06:00 GMT)
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