TIDMKIBO
RNS Number : 7738V
Kibo Mining Plc
12 August 2015
Kibo Mining Plc (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM:KIBO
ISIN: IE00B97C031
("Kibo" or "the Company")
12 August 2015
Rukwa Definitive Mining Feasibility Study - Phase 2, Stage 1 -
Pre-Feasibility Study,
Final Report Findings
Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; AltX:
KBO), the Tanzania focussed mineral exploration and development
company, is pleased to announce the findings from Phase 2, Stage 1,
Mining Pre-Feasibility Study ("MPFS"), of the Company commissioned
Definitive Mining Feasibility Study (DMFS), concerning the mining
element of the Mbeya Coal to Power Project (MCPP).
Key highlights
- Selected mining method - modified terrace mining method, with
over burden removal by means of a free dig (truck and shovel)
method, and coal seam and inter burden mining by means of
mechanised continuous surface mining method.
- Limited processing in the form of destoning of product required.
- River diversion as identified in the Concept Study proven
unnecessary in Pre - Feasibility Pit Optimization.
- Four alternative mining options for the selected mining method
identified, with the Project financially feasible for all of the
options investigated;
- Annual estimated coal sale revenues of between US$48.4million and US$48.6million;
- All-in cost margin ranges from 49% to 62%. Applying the
aforementioned all-in cost margin, Kibo interprets that an annual
profit margin of between US$24 million to $27 million will be
generated;
- Applying a real discount rate of 5.5% the best estimated Net
Present Value ranges from US$211million to US$244million.
- Internal Rate of Return (IRR) ranging between 33.6% and 53.9%
- Return on Investment (ROI) ranging between 595% and 903%
- Payback Period ranging between 2.6 - 3.65 years
Louis Coetzee, CEO of Kibo Mining, said: "We are delighted with
the results from the MPFS, which have surpassed all expectations.
Figures from the MPFS-report confirm that the Mbeya Coal Mine (as
the mining component of the MCPP) is a very robust project in every
aspect. A comparison with the results and figures announced in our
RNS of 08 August 2014, shows that the project fundamentals are
significantly better than what we originally believed at the end of
the Concept Study. The all-in cost margin is one of the key
indicators that measure the overall robustness of the project and
the latest range has improved from 38% - 45% to 49% - 62%. This is
significantly above the 25% level which is considered "healthy" for
this type of project.
We are also delighted with the new estimated Net Present Value
range of US$ 211million to US$ 244 million, with an associated IRR
of 34% to 54%.
The All-in Cost Margin and Net Present Value ranges are
particularly impressive given the very prudent assumptions applied.
This is evidenced by the use of coal pricing significantly below
the current market price, further reflecting the robust economics
of this project. This is also reflected in the very strong ROI
figures.
In addition to the project's very strong economics the MPFS also
delivered decisive results on technical and environmental levels.
The continuous surface miner proved to be a viable option, which
improved mining efficiency and effectiveness significantly and so
did the fact that the overburden could be mined by using "free
digging". The most important impact of these two aspects are
however not of a technical nature but environmental. The use of the
continuous surface miner made any washing of coal unnecessary,
whilst "free digging" allows total avoidance of any explosives,
i.e. blasting. It is specifically the avoidance of any washing that
frees the project of a very expensive and onerous environmental
liability. The fact that we also do not have to do any river
diversion is a further significant positive environmental
impact".
Important Notes for Readers:
The information contained within this report is taken from the
DMFS Phase 2, Stage 1 report produced by Minxcon Projects in
respect of the MMCPP. Recognising the level of commercial
sensitivity and for the protection of all stakeholders' interests
we have limited the technical information that we publish in this
report and in the wider public domain at this time.
Readers must note that operational and financial data pertaining
to any complex development project of this nature is project
specific. Kibo has undertaken the MCPP DMFS to properly and
professionally understand the technical and financial merits of the
project. The findings outlined can only be used in an assessment
and analysis of the MCPP to which this work relates and not as a
generic benchmark standard.
DMFS Phase 2, Stage 1 - Executive Summary Extracts and
Commentary
The Definitive Mining Feasibility Study - Mbeya Coal to Power
Project:
Minxcon (Pty) Ltd ("Minxcon") was commissioned by Kibo Mining
Plc ("Kibo" to compile a Definitive Mining Feasibility Study
("DMFS") on the Mbeya Coal to Power Project ("MCPP" or "Project").
The intended Rukwa Coal Mine is located in south-western Tanzania,
approximately 70 km northwest of the regional capital of Mbeya.
This Report forms part of the total DMFS which aims to design and
plan the establishment and construction of the Rukwa Coal Mine.
DMFS Deliverable:
The main deliverable of Phase 2, Stage 1 of the DMFS, the
"Pre-Feasibility Study Report" is a report providing an independent
assessment on an order of magnitude level of detail, towards
completion of the Definitive Mining Feasibility Study ("DMFS").
Execution of the Pre-Feasibility Study forms part of an integrated
project development process for the MCPP and is informed by the
independent technical report on the Rukwa Coal Resource, as well as
the information contained in the MCPP Information Memorandum
("Summary of Investment Opportunity") and the Concept Study that
was completed during Phase 1, Stage 1 of the DMFS.
Financial summary:
- Four alternative options of the selected mining method
identified for project development (the financial data ranges that
follow are dependent on which of the project development options is
selected);
- The Project is financially feasible for all of the options investigated;
- The Project was assessed for a 28 year mine life, with an
average annual coal production of 1.48million tonnes over the life
of mine;
- Annual estimated coal sale revenues of between US$48.4million and US$48.6million;
- All-in cost margin ranges from 49% to 62%;
- High all-in cost margin reflects low operating costs as a
result of the proposed mining method and shallow ore body, small
sustaining capital expenditure and fixed coal price as received
from the power plant;
- The high all-in cost margin is a key indicator of the robustness of the Project;
- Capital investment of between US$38 million and US$73 million
and based on current preferred option the capital investment will
be US$ 38 million;
- Payback period for the Project is estimated at between 2.6 -
3.65 years and based on the current preferred option the payback
period will be 2.6 years;
- Applying a real discount rate of 5.5% the best estimated Net
Present Value ranges from US$211million to US$244million, based on
current preferred option the Net Present Value will be US$211
million with an IRR of 54%;
Coal Mineral Resource:
Mineral Resource classification and reporting has been conducted
in accordance with the requirements of NI 43-101 by Geological
Exploration Mining Evaluation Consulting Services (Pty) Limited
("GEMECS") who has reviewed the coal properties in accordance to
the terms, definitions and guidelines provided in "A Standardized
Coal Resource/Reserve Reporting System for Canada". The estimated
Coal Inferred and Indicated Mineral Resources are outlined in the
'Rukwa Mineral Resource Section' outlined underneath the 'Notes for
Editors' section below.
Capital Footprint and Battery Limits:
The Capital Footprint and Battery Limits for the mine and plant
includes the opencast pit, mining and processing equipment, mining
and plant buildings, all mining stockpiles, coal product
transportation infrastructure to power plant, electrical supply to
and reticulation within the mine and plant area, excess water
pipeline to power plant, staff accommodation and communication
systems to and reticulation within the mine and plant area. The
power plant's Battery Limits (excluded from Minxcon's Battery
Limits) include everything inside their security fence or boundary,
electrical power lines, ash storage dams as well as a water line
from Lake Rukwa. The mine will be responsible for the construction
of all items that fall within its capital footprint as well as
various infrastructure leading up to the new envisioned power
plant.
Mining and Processing Options:
Four different options were investigated during Phase 2 of Stage
1 of the DMFS. The differences in the 4 options are mainly
applicable to alterations in mining operating costs and mining
capital costs:
-- Option 1 (Surface Miner, Contractor, No Crushing)
-- Option 2 (Surface Miner, Owner Mining, No Crushing)
-- Option 3 (Free Dig, Contractor Mining, Crushing)
-- Option 4 (Free Dig, Owner Mining, Crushing)
All these options described above were valued through Minxcon's
discounted cash flow ("DCF") model to demonstrate the viability and
justifiability of extraction of coal under a defined set of
realistically-assumed modifying factors.
7 different coal seams exist for the Rukwa Coal Mine. It was
proven that a constant coal production over the total Life of Mine
("LoM") can be achieved.
Capital Expenditure:
All costs were sourced from actual quotations as provided by the
Original Equipment Manufacturers ("OEMs") and/or from retail
companies. Where quotations could not be sourced, historical costs
and quotations were escalated to align with the current financial
year and market inflation figures. Detail about the capital is
described in the relevant mining and plant reports. Capital items
were awarded weighted percentages based on the accuracy of the
source.
The capital estimation was based on the capital footprint of the
MCPP. This footprint is defined by the battery limit of the
engineering and infrastructure design. The battery limit is broken
down into a work breakdown structure ("WBS") defining the various
area of interest. It was assumed that the fleet would be replaced
every five years at 70% of original fleet cost in the capital
schedule for Option 3 and Option 4.
Discounted Cash Flow Modelling:
Minxcon's in-house DCF model was employed to illustrate the NPV
for the operation in real terms. The NPV is derived from
post-royalties (Note: No royalties are payable on strategic
minerals in Tanzania and coal is deemed to be a strategic mineral
in Tanzania) and tax, post-debt real cash flows, using the
techno-economic parameters, commodity price and macro-economic
projections.
This valuation is based on a free cash flow and measures the
economic viability of the ore body to demonstrate if the extraction
of the Mineral Reserve is viable and justifiable under a defined
set of realistically-assumed modifying factors.
A discount rate of 5.5% (in real terms) was calculated for the
discount factor, but the NPV was also shown for a range of discount
rates. The full intrinsic value of the operation was reported - no
attributable value was calculated. For the purpose of the financial
model the coal prices were constant throughout the LoM.
Project Key Risks:
The business of mining and mineral exploration and production by
their nature contain significant operational risks. The business
depends upon, amongst other things, successful prospecting
programmes and competent management. Profitability and asset values
can be affected by unforeseen changes in operating circumstances
and technical issues.
Factors such as political and industrial disruption, currency
fluctuation and interest rates could have an impact on future
operations, and potential revenue streams can also be affected by
these factors. The majority of these factors are, and will be,
beyond the control of any operating entity.
The Project is identified as being most sensitive to the coal
price and operating costs.
Contacts
+27 (0) 83 2606126 Kibo Mining Chief Executive Officer
Louis Coetzee plc
-------------------- ------------------- -------------------- ------------------------
Andreas Lianos +27 (0) 83 4408365 River Group Corporate Adviser
and Designated Adviser
on JSE
-------------------- ------------------- -------------------- ------------------------
Jon Belliss +44 (0) 207 382 Beaufort Securities Broker
8300 Limited
-------------------- ------------------- -------------------- ------------------------
Oliver Morse +61 8 9480 2500 RFC Ambrian Nominated Adviser
Limited on AIM
-------------------- ------------------- -------------------- ------------------------
Bell Pottinger Investor and Media
Daniel Thöle +44 (0) 203 772 Relations
2500
-------------------- ------------------- -------------------- ------------------------
Kibo Mining - Notes to editors
Kibo Mining is listed on the AIM market in London and the AltX
in Johannesburg. The Company is focused on exploration and
development of mineral projects in Tanzania, and controls one of
Tanzania's largest mineral right portfolios. Tanzania provides a
secure and stable operating environment for the mineral resource
industry and Kibo Mining therein.
Kibo Mining holds a thermal coal deposit at Rukwa, which has a
significant JORC compliant defined resource (See Table 1 below),
and is developing a 250-350MW mouth-of-mine thermal power station,
the Mbeya Coal to Power Project ("MCPP"), previously called Rukwa
Coal to Power Project ("RCPP"), with an established management team
that includes Standard Bank as Financial Advisor. Kibo is
undertaking a Coal Mining Definitive Feasibility Study and a Power
Pre-Feasibility Study for the Mbeya project with an integrated
Coal-Power interim study report to be released in the near term. On
20(th) April 2015, Kibo signed a Joint Development Agreement for
the completion of the Definitive Feasibility Studies and
development of the MCPP with China based EPC contractor SEPCO
III.
The Company also has extensive gold focused interests including
Lake Victoria Goldfields and Morogoro projects. At Lake Victoria,
the Company has projects with a 550,000oz JORC compliant gold
Mineral Resource at Imweru Project (See Table 2 below) and a
168,000oz NI 43-101 compliant gold Mineral Resource at the Lubando
Project (See Table 3 below) in which the Company holds a 90%
attributable interest. The Company is currently undertaking a
Definitive Feasibility Study on its Imweru Project.
Kibo also holds the Haneti Project on which the latest technical
report confirms prospectivity for nickel, PGMs, gold and strategic
metals including lithium.
Kibo Mining further holds the Pinewood (coal & uranium)
project where the company has entered into a 50/50 Exploration
Joint Venture with Metal Tiger plc.
Finally the Company also holds the Morogoro (gold) project where
the company has also entered into a 50/50 Exploration Joint Venture
with Metal Tiger plc.
The Company's projects are located in the established and gold
prolific Lake Victoria Goldfields, the emerging goldfields of
eastern Tanzania and the Mtwara Corridor in southern Tanzania where
the Government has prioritised infrastructural development
attracting significant recent investment in coal and uranium. The
Company has a positive working relationship with the Tanzanian
government at local, regional and national levels and works hard to
maintain positive relationships with all communities where company
interests are held. The Company recognises the potential to enhance
the quality of life and opportunity for Tanzanian citizens through
careful development of its projects.
Updates on the Company's activities are regularly posted on its
website www.kibomining.com
Technical data
Rukwa Mineral Resource
Table 1 below presents a table showing the Mineral Resource
estimate for the Rukwa Coal Project. The table is taken from an NI
43 101-Compliant Report by GEMECS (Pty) Ltd dated April 2012.
Table 1
RUKWA COAL RESOURCE SUMMARY- GEMECS (Pty) Ltd
--------------------------------------------------------
SEAM NI 43-101 IN SITU
---------- ----------------- ---------- -------------
SEAM THICKNESS CLASS MILLION TONS
---------- ----------------- ---------- -------------
S4 1.14 Indicated 2.17
---------- ----------------- ---------- -------------
S3U 2.04 Indicated 6.92
---------- ----------------- ---------- -------------
S3L 2.3 Indicated 12.63
---------- ----------------- ---------- -------------
S2 3.45 Indicated 23.43
---------- ----------------- ---------- -------------
S1U 2.48 Indicated 7.34
---------- ----------------- ---------- -------------
S1L 2.92 Indicated 17.4
---------- ----------------- ---------- -------------
S0 1.08 Indicated 1.44
---------- ----------------- ---------- -------------
Total Indicated Resources 71.34
----------------------------- ---------- -------------
S4 1.31 Inferred 1.38
---------- ----------------- ---------- -------------
S3U 2.24 Inferred 2.94
---------- ----------------- ---------- -------------
S3L 2.27 Inferred 3.86
---------- ----------------- ---------- -------------
S2 3.42 Inferred 7.94
---------- ----------------- ---------- -------------
S1U 2.05 Inferred 6.5
---------- ----------------- ---------- -------------
S1L 3.15 Inferred 12.83
---------- ----------------- ---------- -------------
S0 1.06 Inferred 2.6
---------- ----------------- ---------- -------------
Total Inferred Resources 38.05
----------------------------- ---------- -------------
TOTAL RESOURCES *109.39
----------------------------- ---------- -------------
*Kibo holds 100% of the Rukwa Mineral Resource
Imweru Mineral Resource
Table 2 below presents a table showing the Mineral Resource
estimate for the Imweru Project at a base case economic cut-off
grade for the reporting of the resource of 0.4 g/t. The table is
taken from a JORC-Compliant Report by Tetra Tech EBA dated February
2014.
Table 2
Material Cut- Specific Metric Gold Contained
Area Type Classification off Gravity Tonnes Short Grade Gold Ounces
(g/t) (t) Tons (g/t) (troy)
========= ============= ================== ======== ============ ============ ============ ======== ===============
Laterite Indicated 0.40 2.50 131,000 144,000 1.785 8,000
============= ============================ ======== ============ ============ ============ ======== ===============
Saprolite Indicated 0.40 2.50 706,000 778,000 1.387 32,000
============= ============================ ======== ============ ============ ============ ======== ===============
Bedrock Indicated 0.40 2.89 1,895,000 2,089,000 1.043 64,000
============= ============================ ======== ============ ============ ============ ======== ===============
Central Total Indicated 0.40 2.77 2,732,000 3,012,000 1.168 103,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
Laterite Inferred 0.40 2.50 685,000 755,000 1.317 29,000
============= ============================ ======== ============ ============ ============ ======== ===============
Saprolite Inferred 0.40 2.50 1,047,000 1,154,000 1.040 35,000
============= ============================ ======== ============ ============ ============ ======== ===============
Bedrock Inferred 0.40 2.89 7,838,000 8,640,000 1.029 259,000
============= ============================ ======== ============ ============ ============ ======== ===============
Central Total Inferred 0.40 2.82 9,569,000 10,548,000 1.051 323,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
East Total Inferred 0.40 2.70 2,653,000 2,925,000 1.449 124,000
========= ============= ================== ======== ============ ============ ============ ======== ===============
Indicated 0.4 2.77 2,732,000 3,012,000 1.168 103,000
========================================== ======== ============ ============ ============ ======== ===============
Inferred 0.4 2.79 12,222,000 13,473,000 1.137 447,000
========================================== ======== ============ ============ ============ ======== ===============
Imweru Property Combined
Total (inf+ind) 0.4 2.79 14,954,000 16,485,000 1.143 550,000
======================== ================== ======== ============ ============ ============ ======== ===============
*Kibo holds 90% of the Imweru Mineral Resource
* Total estimates are rounded, based on composites capped at 26
g/t gold at Imweru Central and 25 g/t at Imweru East, the cut-off
grade is based on a gold price of US$1,200 and a 90% metallurgical
recovery is assumed in calculation of cut-off grade. A base case of
0.40 g/t has been selected.
** Classification of Mineral Resources incorporates the terms
and definitions from the Australian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC Code)
published by the Joint Ore Reserve Committee (JORC)
Lubando Mineral Resource
Table 3 below presents a table showing the Mineral Resource
estimate for the Lubando Project at a base case economic cut-off
grade for the reporting of the resource of 0.5 g/t Au. The table is
taken from an NI 43 101-Compliant Report by EBA Engineering
Consultants Limited (now part Tetra Tech EBA) dated August
2009.
TABLE3: LUBANDO MINERALRESOURCE SUMMARY - BASECASE*
-------------------------------------------------------------------------------------------------------
East Zone East Zone
Category West Zone South East Zone North Total
Mid
--------------------------- -------------- ------------- ------------- ------------- -------------
Measured Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Measured Resource(t) 107,900 4,880 16,900 54,440 184,150
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.69 2.52 1.72 2.48 1.95
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 5,900 400 950 4,340 11,500
--------------------------- -------------- ------------- ------------- ------------- -------------
Indicated Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Indicated Resource(t) 280,710 18,330 61,000 149,350 509,420
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.61 2.23 1.89 2.73 1.99
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 14,500 1,300 3,700 13,120 32,600
--------------------------- -------------- ------------- ------------- ------------- -------------
Inferred Resource
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Resource(t) 1,090,000 65,470 209,340 535,330 1,900,140
--------------------------- -------------- ------------- ------------- ------------- -------------
Grade(g/t) 1.27 1.56 3.34 3.13 2.03
--------------------------- -------------- ------------- ------------- ------------- -------------
Total Gold(oz) 44,550 3,300 22,500 53,900 124,200
--------------------------- -------------- ------------- ------------- ------------- -------------
*Kibo holds 90% of the Lubando Mineral Resource
* Numbers are rounded. Composites capped at 10.85g/t gold.
Cut-off grade of 0.5 g/t gold based on a gold price of US$850/oz
and assumed 100% metallurgical recovery.CIM definitions were
followed for Mineral Resources.
Pursuant to the terms of an inherited agreement with Barrick
East Africa Exploration LTD (BEAL), Kibo currently has an effective
90% interest in the Imweru and Lubando Project (and thus a 90%
attributable interest in the Imweru and Lubando Mineral Resources
shown in Table 2 and 3 above), with Barrick having a 10% carried
interest up to a decision to mine at which point they have to
contribute or be diluted to a 2% net smelter royalty. BEAL also has
a first right of refusal pursuant to which they can buy the 90%
interest in the project at an agreed market related value after
completion of a Bankable Feasibility Study. Kibo remains the
operator of the project.
Review by Qualified Persons
The information in this announcement that relates to the Rukwa
Coal Mineral Resource is taken from a report titled "Independent
Technical Report for the Rukwa Coal Project, Mbeya Region, United
Republic of Tanzania" dated 19(th) April 2012 by CD van Niekerk
Director and Principal Geologist with the firm GEMECS (Pty) Ltd. Mr
van Niekerk is a Professional Natural Scientist with the South
African Council for Natural Scientific Professions (SACNASP),
Registration No. 400066/98 and a Fellow Member of the Geological
Society of South Africa. He has relevant experience and technical
qualifications to be a "Qualified Person" for reporting coal
resources to the NI 43-101 Standard
Information in this announcement that relates to the Imweru
Mineral Resource is taken from the report titled "Resource Update
for the Imweru Property Geita Region Northern, Tanzania, JORC
Competent Persons Report" dated February 17(th) 2014 (the
"Report"). The Report states a JORC-compliant Mineral Resource
estimate and was prepared for Kibo Mining plc by James Barr P.Geo.
and Darryn Hitchcock P.Geo. Senior Geologist and Geologist
respectively with TetraTech EBA Ltd. Both Mr. Barr and Mr.
Hitchcock are registered as Certified Professional Geologists with
Association of Professional Engineers and Geoscientists of British
Columbia a recognised professional organisation. Mr Barr as
principal author responsible for the Report has experience in the
evaluation and reporting of Archaean Gold projects and is a
"Qualified Person" for reporting gold resources to the JORC
Standard. He consents to the inclusion in this document of the
matters based on his information in the form and context in which
they appears.
The information in this announcement that relates to the Lubando
Mineral Resources is taken from a report titled "Technical Report
on the Lubando property, Mwanza, Tanzania" dated 31(st) August
2009" (the "Report") The Report is NI 43-101 compliant and was
prepared for Great Basin Gold Rusaf Gold Limited by Nathan Eric
Fier C.P.G., P.Eng. Market Director for EBA Engineering Consultants
Ltd and a Senior Mining Consultant. Mr. Fieris registered as a
Certified Professional Geologist with the American Institute of
Professional Geologists, Registration No 10062, and a professional
Engineer in British Columbia, Canada Registration No. 135165. He
has extensive experience in the evaluation and reporting of
Archaean Gold projects.
The Company's Exploration Director, Noel O'Keeffe has reviewed
the resource reports and the references to them in this
announcement.
Johannesburg
12 August 2015
Corporate and Designated Adviser
River Group
This information is provided by RNS
The company news service from the London Stock Exchange
END
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