Kibo Mining Plc Power PFS Rukwa Coal to Power Project Update (4212Z)

TIDMKIBO

RNS Number : 4212Z

Kibo Mining Plc

11 December 2014

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: IE00B61XQX41

("Kibo" or "the Company")

Dated: 11 December 2014

Power Pre-Feasibility Update - Rukwa Coal to Power Project

Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; AltX: KBO), the Tanzania focussed mineral exploration and development company, is pleased to confirm that the Company has now received the Power Pre-Feasibility Study Report, covering the power generation element of the Rukwa Coal to Power Project ("RCPP").

Two Components to the RCPP - Coal Mining and Power Generation

Within our announcement of 1 December 2014 we advised shareholders that the Phase 1, Stage 1 report in respect of the RCPP Definitive Mining Feasibility Study ("DMFS") covering the coal mining component of the RCPP, had been received by the Company. That report significantly exceeded our expectations. We further announced to market on 9 December 2014 the key findings of this report, which highlighted a conservatively calculated project NPV range of between US$116m and US$141m at a 5.7% discount rate and an average annual mining margin of between US$14.8m to US$19.4m per annum.

The second component of the RCPP, and the subject of this announcement, is power generation which, when combined with the coal mining component, dramatically enhances the value of the project as a whole.

Background to Study

The Power Pre-Feasibility Study ("PPFS") conducted by Aurecon, was commissioned by the Company as announced to market on 10 November 2014. Recognising the wealth of data available to Aurecon from historic RCPP work programmes, we were able to accelerate completion of this study and the estimated early December delivery has been met by our independent advisers. We would like to thank Aurecon for their expediency, diligence and professionalism shown in the timely delivery of this study and during the course of their work.

Power Pre-Feasibility Study - Report Overview

We are now pleased to confirm that the PPFS report has also exceeded the Company's expectations in terms of the robustness of overall project economics including notably, the deliverable underlying forecast free cash flow, based on preliminary internal financial modelling of the relevant results from the PPFS Report and DMFS Phase 1, Stage 1 Report. This is highly significant, demonstrating the potential for the project to achieve an accelerated payback of capital expended on project development and thus reducing the project risk profile. This factor greatly assists the Company particularly when considering our ability to conclude the best terms with prospective commercial partners. We are now reviewing the PPFS report in detail and will prepare an update to shareholders with regard to the report contents.

In both the coal mining and power generation components, the Company and our advisors consistently adopted prudent assumptions, duly reflected in the preparation and delivery of the feasibility reports received to date. Notwithstanding this prudent approach, the unique nature of the RCPP meant that we always expected project economics would be strong. The advisers' technical work completed thus far has demonstrably proven that to be the case.

Moreover, the entirety of our work has never wavered from the key principles that the RCPP must be developed in a manner that properly reflects the local, regional and national need for near term energy solutions, whilst delivering cost effective power to enhance the lives of the Tanzanian people.

Detailed PPFS Announcement to Follow

A review of the PPFS report is now underway and a separate update announcement will be provided to shareholders in due course. This update will focus on a summary of power generation operations and key financial data related to the power generation component of the RCPP.

Louis Coetzee, CEO of Kibo Mining plc said "We are extremely pleased to receive this second key report covering the power generation component of the RCPP. In particular the underlying free cash flow demonstrated, underpins project viability, reduces risk and considerably enhances the economic attractiveness of the RCPP.

The RCPP was pursued for the exponential opportunity a combined coal mining and power generation operation offered Kibo and its shareholders. We were delighted to receive positive findings for the coal mining element and now even more so for the power generation element. The value being independently identified within the two reports clearly demonstrates that the RCPP is a substantially valuable and transformational asset for the Company.

We are also anticipating finalisation of the Preliminary Economic Assessment report for our Imweru Gold project, another asset that we consider holds considerable financial and strategic value to Kibo."

Contacts

 
 Louis Coetzee       [phone]   Kibo Mining       Chief Executive Officer 
                                           plc 
------------------  -------------------  ----------------  ------------------------ 
 Andreas Lianos      [phone]   River Group       Corporate Adviser 
                                                             and Designated Adviser 
                                                             on JSE 
------------------  -------------------  ----------------  ------------------------ 
 Jon Belliss         [phone]      Hume Capital      Broker 
  Abigail Wayne       1470                 Securities 
                                           Plc 
------------------  -------------------  ----------------  ------------------------ 
 Oliver Morse        [phone]      RFC Ambrian       Nominated Adviser 
  and Trinity                              Limited           on AIM 
  McIntyre 
------------------  -------------------  ----------------  ------------------------ 
 Daniel Thöle   [phone]       Bell Pottinger   Investor and Media 
  Lucinda Alderson    2500                                   Relations 
------------------  -------------------  ----------------  ------------------------ 
 

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 NI43-101 compliant defined resource (See Table 1 below) and is developing a 250-350MW mouth-of-mine thermal power station with an established management team that includes Standard Bank as Financial Advisor. Kibo is undertaking a Coal Mining Definitive Feasibility Study (DMFS) and a Power Pre-Feasibility Study (PPFS) for Rukwa with initial findings for the PPFS to be released in the near term.

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 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, with Preliminary Economic Assessment study findings to be released in the near term.

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 signed a MOU to enter 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 Centraland 25 g/t at Imweru East, the cut-off grade isbased on a gold price of US$1,200 and a 90% metallurgical recovery is assumed in calculation of cut-offgrade. A base case of 0.40 g/t has been selected.

** Classification of MineralResources incorporates the terms and definitions from the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) published bythe 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

11 December 2014

Corporate and Designated Adviser

River Group

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The company news service from the London Stock Exchange

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