Armadale Capital: "Robust Project Demonstrated" by Mpokoto Feasibility Study

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Robust Project Demonstrated by Mpokoto Feasibility Study

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, has announced the preliminary results of the Feasibility Study for Phase 1 of the Mpokoto Gold Project in the Katanga Province of the Democratic Republic of Congo. The Study is based on the intended initial phase of mining at Mpokoto, focusing on the shallower oxide portion of the resource which will be prioritised for exploitation in conjunction with the continued development of the deeper unweathered ore designated for Phase 2.

The Study, which demonstrates robust fundamentals, provides the foundation for Armadale to further progress discussions with A-MCS, the potential funders of the Project as well as identify further expansion opportunities at Mpokoto.

– Mpokoto has continued to demonstrate it is a robust low cost gold development project with attractive fundamentals. Study focused on initial phase of mining – Phase 1 – based only on the shallow oxide Orebody (30-40m)
– Mpokoto has a current Total Mineral Resource of 678,000oz gold from 14.58 million tonnes @ 1.45g/t Au at a cut-off grade of 0.5g/t
– Open pit mining for Phase 1 presently scheduled over four years (annual mine production of 720,000 tonnes per annum) to produce an average 24,900 oz of gold per annum
– Total revenues from Phase 1 of US$138.6 million, with average annual revenues of US$30.80 million at a gold price of US$1,250/oz and average annual pre-tax net operating profit of US$11.14 million
– Capital cost of US$25.15 million, with operating costs of US$792/oz
– Pre-tax net present value for Phase 1 of US$19.05 million based on a discount rate of 5% and a gold price of US$1,250/oz and internal face of return of 44%
– Expanded Scoping Study demonstrated Phase 2 had an additional NPV of approximately US$20 million
– Significant further upside potential from unweathered ore at 30m depth – Phase 2 of the Project
– Completion of the Study provides a foundation to commence finalisation of funding of the Project

Peter Marks, Chairman of Armadale, commented:

“The results of the Study demonstrate that Mpokoto is a commercially valuable gold development project, confirming its technical viability as well as offering attractive returns and near term production potential. Its positive returns are even more significant given that the Study covers Phase 1 of the Project only, which covers a fraction of the total known mineralisation. The Expanded Scoping Study showed that Phase 2 of the Project, which relates to the deeper unweathered ore, had a pre tax NPV of approximately US$24 million, taking the overall potential NPV of the Project to US$43 million. There is also further significant upside available from expanding the existing resource base of the Project, particularly the oxide resource, which is lower cost to process.

“Having completed this initial phase of the Study, we are now focused on finalising the funding of the Project with our partners, A-MCS. These discussions are ongoing, and once finalised construction of the Project can commence.

Alongside these discussions the board will consider further options to optimise the Project as well as looking at options to expand the overall resource. We look forward to updating the market with further progress.”

Armadale have previously undertaken a two level scoping assessment for the Project. The results of this work were reported during October 2014. Subsequent to the completion of this Study further work has been undertaken on the Project with the aim of progressing the Project to feasibility study:

Additional geotechnical evaluation of the fresh un-weathered rock
A pit optimisation study using suitable mining software
Design of open pits based on pit optimisation
Consultations with mining contractors on the mining costs
A significant metallurgical test work programme
Design of the mine surface and infrastructure layout

The feasibility study work undertaken to date principally covers only Phase 1 of the Project, which targets oxide ore. Some transition ore is processed later in the life of the mine. Work on Phase 2, the mining and processing of sulphide material, remains at concept level, having been covered in the Expanded Scoping Study.

The following are the headline results of the work completed to date on Phase 1:

– Phase 1 of the Project examines the mining and processing of the near surface ores:
Oxide ore
Transition ore
– Indicated and inferred categories of mineral resources are considered in the evaluation
– The Study supports a 60ktpm scenario to produce 111 koz (recovered) over 4.4 years
– The metallurgical process flow sheet for treating oxide material has been determined:
– The initial process plant for oxides is scrubbing, crushing, milling, gravity concentration, cyanide leaching, elution, electro winning and finally smelting
– The plant is costed on a low Capital modular approach

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