Amara Mining PLC 63% increase in Indicated Resources at Yaoure (3312B)

TIDMAMA

RNS Number : 3312B

Amara Mining PLC

06 January 2015

6 January 2015 AIM: AMA

Amara Mining plc

("Amara" or "the Company")

63% INCREASE IN INDICATED MINERAL RESOURCES AT YAOURE GOLD PROJECT

Amara Mining plc, the AIM-listed West African focused gold mining company,is pleased to announce an updated National Instrument ("NI") 43-101 compliant Mineral Resource estimate for its 100% owned Yaoure Gold Project ("Yaoure") in Côte d'Ivoire.

HIGHLIGHTS

-- Total Mineral Resources at Yaoure of 6.8million ounces(1) : 4.4 million ounces Indicated (106.3Mt at 1.29g/t) and 2.4 million ounces Inferred (63.0Mt at 1.19g/t)

o 65% of Yaoure's Mineral Resources are in the higher confidence Indicated category, de-risking the deposit

o Yaoure is the largest gold development project in West Africa by Mineral Resource

o Amara's total Mineral Resources are 9.6 million ounces - the largest resource base of any London-listed junior miner(2)

-- 1.7 million ounce (63%) increase in higher confidence Indicated Mineral Resources compared to the Mineral Resource update announced on 29 September 2014

-- Higher grade Indicated Mineral Resources contained within US$950 and US$800 per ounce pit shells

o US$950/oz pit shell contains 3.1 million ounces (64.8Mt at 1.48g/t) in the Indicated category, a 32% increase compared to the September resource update

o US$800/oz pit shell contains 2.6 million ounces (50.7Mt at 1.57g/t) in the Indicated category, a 44% increase compared to the September resource update

-- Further exploration upside as the deposit remains open along strike with indications of additional gold in parallel structures to the West (towards surface), as well as the opportunity to convert further Inferred Mineral Resources to the Measured and Indicated categories

NEXT STEPS

-- Comprehensive metallurgical test work programme underway focused on recovery rate, reagent consumptions and comminution requirements

-- Pre-Feasibility Study ("PFS") expected in March 2015 - anticipated to confirm compelling economics outlined in the Preliminary Economic Assessment ("PEA") due to Yaoure's excellent existing infrastructure, including the availability of low-cost hydro-electric power

Notes

1. Based on a pit optimisation using a US$1,500 gold price, and reported at a 0.5g/t cut-off. Compared to the 6.3 million ounce Mineral Resource (62.0Mt at 1.36g/t for 2.7 million ounces Indicated and 86.6Mt at 1.30g/t for 3.6 million ounces Inferred) with an effective date of 23 September 2014.

2. A junior miner is defined here as an explorer/developer or a producer with projected FY2014 production of less than 200,000 ounces.

John McGloin, Chairman and Chief Executive Officer of Amara, commented:

"The delivery of the Yaoure Mineral Resource update is the first step towards completing the PFS, which is expected in March 2015. The 2014 infill drilling programme has improved our understanding of the controls on the mineralisation and highlighted the potential for further parallel structures to the West of the current pits. The results we received from the programme correlated strongly to the original resource model, confirming the robustness of the Yaoure deposit, and it is encouraging to see that the higher grade zones have strong continuity within a moderate grade matrix of mineralisation. This gives me confidence that there will be a strong conversion of the Indicated resources to Mineral Reserves when we release the PFS. I look forward to delivering the PFS later this quarter, which is expected to maintain the powerful economics outlined in the PEA through the combination of Yaoure's large Mineral Resource, simple metallurgy and the excellent existing infrastructure, including low cost power, close to site."

Section diagrams are available at www.amaramining.com/Operations/Yaoure. Information on Yaoure's geology and Mineral Resource classification is included in Appendix 1 and Appendix 2.

Increase in Yaoure's total Mineral Resource estimate

With 6.8 million ounces of Mineral Resources, Yaoure is the largest gold development project in West Africa. Amara's total resources have increased to 9.6 million ounces, which represents the largest resource base of any London-listed junior gold mining company.

Today's Mineral Resource estimate represents an increase of 485,000 ounces compared to the estimate released in September 2014, with 65% included within the higher confidence Indicated category. It is from these Mineral Resources that Mineral Reserves can be defined.

The Mineral Resource estimate is reported above a 0.5g/t cut-off and constrained within an open pit shell derived using a long term gold price of US$1,500 per ounce. The project is robust at higher cut-off grades as demonstrated in the table below.

Yaoure Mineral Resource estimate within a US$1500 per ounce pit shell, including cut-off grade sensitivity, as of 5 January 2015

 
                   Indicated                   Inferred 
--------  --------------------------  -------------------------- 
 Cut-Off   Tonnes   Grade    Content   Tonnes   Grade    Content 
   g/t      (Mt)     (g/t)    (Koz)     (Mt)     (g/t)    (Koz) 
    Au 
--------  -------  -------  --------  -------  -------  -------- 
   0.5     106.3     1.29     4,416     63.0     1.19     2,405 
--------  -------  -------  --------  -------  -------  -------- 
   0.8      62.5     1.75     3,526     37.4     1.57     1,883 
--------  -------  -------  --------  -------  -------  -------- 
   1.0      46.7     2.05     3,070     26.9     1.83     1,580 
--------  -------  -------  --------  -------  -------  -------- 
 

Notes

1. The effective date of the Yaoure Mineral Resource estimate is 5 January 2015, prepared by Mario E Rossi, GeoSystems International, Inc.

2. The gold price used in the Mineral Resource estimate is US$1,500/oz, assuming an open pit mining scenario, processing via tank leaching. Pit slopes are 44 in oxide, 53 in sulphide. Recoveries have been assumed at 90%. Pit Optimisation was completed by A. Wheeler for all prices shown here.

3. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

4. There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, and political or other relevant issues that may materially affect the resource estimates.

5. Totals and average grades are subject to rounding to the appropriate precision and some columns or rows may not compute exactly as shown.

6. The stated resources include dilution in the block model that relates to the level of low selectivity envisioned in an open pit operation, assuming 10m bench heights.

The Mineral Resource update is NI 43-101 compliant and a technical report will be published on Amara's website within 45 days of today.

63% increase in Indicated Mineral Resources at Yaoure

The objective of the 2014 Yaoure drilling programme was to upgrade the most economic part of the Mineral Resource defined in December 2013, which was primarily Inferred, to the higher confidence Indicated category. The 2014 drilling campaign, which was conducted between April and October 2014, saw a total of 85,574m drilled (including 2,957 metres of geotechnical drilling). This reduced the average sample spacing from 100m to 50m across the Yaoure deposit. The Indicated portion of the deposit contains the highest grade areas and will form the basis for Mineral Reserves. From these, Amara will deliver a PFS for Yaoure, which is expected in March 2015.

The Yaoure deposit now contains 4.4 million ounces of gold within the Indicated category (106.2Mt at 1.29g/t). The Mineral Resource remains strong at higher cut-off grades, with 3.1 million ounces (46.7Mt at 2.05g/t) above a 1.0g/t cut-off grade in the Indicated category. This significant upgrade in categorisation of Mineral Resources substantially de-risks the Yaoure deposit and increases Amara's confidence in it.

Mineral Resource remains robust in lower gold price pit shells

Amara used pit shells priced at US$800 per ounce and US$950 per ounce as the basis for the different scenarios of the PEA released in March 2014. Following today's Mineral Resource update, these pit shells remain robust, with almost 80% of contained gold within the Indicated category.

Yaoure Mineral Resource estimate within a US$950 per ounce pit shell, including cut-off grade sensitivity, as of 5 January 2015

 
                   Indicated                   Inferred 
--------  --------------------------  -------------------------- 
 Cut-Off   Tonnes   Grade    Content   Tonnes   Grade    Content 
   g/t      (Mt)     (g/t)    (Koz)     (Mt)     (g/t)    (Koz) 
    Au 
--------  -------  -------  --------  -------  -------  -------- 
   0.5      64.8     1.48     3,079     20.2     1.28      831 
--------  -------  -------  --------  -------  -------  -------- 
   0.8      42.4     1.92     2,620     14.1     1.55      706 
--------  -------  -------  --------  -------  -------  -------- 
   1.0      33.9     2.18     2,377     10.5     1.78      602 
--------  -------  -------  --------  -------  -------  -------- 
 

Yaoure Mineral Resource estimate within a US$800 per ounce pit shell, including cut-off grade sensitivity, as of 5 January 2015

 
                   Indicated                   Inferred 
--------  --------------------------  -------------------------- 
 Cut-Off   Tonnes   Grade    Content   Tonnes   Grade    Content 
   g/t      (Mt)     (g/t)    (Koz)     (Mt)     (g/t)    (Koz) 
    Au 
--------  -------  -------  --------  -------  -------  -------- 
   0.5      50.7     1.57     2,560     15.6     1.35      676 
--------  -------  -------  --------  -------  -------  -------- 
   0.8      35.2     1.98     2,241     11.7     1.58      595 
--------  -------  -------  --------  -------  -------  -------- 
   1.0      28.8     2.22     2,058     8.9      1.80      513 
--------  -------  -------  --------  -------  -------  -------- 
 

Notes

1. Mineral resources calculated using the same basis as US$1,500/oz pit shell - see notes above.

In addition, there remains significant exploration upside potential at Yaoure. The 2014 drilling campaign identified three North-South structures within the Yaoure Central Zone, which are parallel to the CMA zone and are seen to have similar alteration suites and mineralisation. The most westerly of these structures (Y3) was recorded in the intercepts from the deepest boreholes on the western margin of the Yaoure Central pit and the projection to surface has been the site of artisanal activity. Only limited near surface testing of this structure has been carried out and it remains a target for future exploration. There is also potential to upgrade further Inferred Mineral Resources to the Measured and Indicated categories due to the presence of near surface Inferred resources in the US$950 per ounce and US$800 per ounce pit shells.

Next Steps

Amara is on track to deliver a PFS for Yaoure in March 2015 with work underway on all elements including an extensive metallurgical test work programme focused on confirming Yaoure's recovery rate, reagent consumptions and comminution requirements.

The PFS will be based on the results of this Mineral Resource update and the metallurgical test work, and will take into account the excellent existing infrastructure at Yaoure, which has a positive impact on upfront capital costs and operating costs. In addition, maiden Mineral Reserves for the sulphide zone at Yaoure will be reported.

Background on Yaoure Gold Project

Amara delivered a Preliminary Economic Assessment for Yaoure in Q1 2014. It demonstrated:

-- Yaoure has the potential to be one of the top 10 gold mines in Africa by production and top 50 in the world

-- Forecast average production of 325,000 ounces per annum over a 12 year mine life and all-in sustaining costs of US$691 per ounce

-- Headline 8Mtpa scenario delivers an IRR of 32% at a gold price of US$1,250 per ounce and an NPV of US$688 million (8% discount rate)

-- Yaoure is one of the few development projects in West Africa that remains resilient at low gold prices, with an IRR of 23% at US$1,100 per ounce

-- The project is flexible and delivers similarly strong returns over a range of alternative throughput scenarios

The compelling economics are driven by the excellent existing infrastructure in Côte d'Ivoire, with low cost hydro-electric power from the Kossou dam (5km from site) and a tarred dual carriageway to within 40km of site.

For more information please contact:

 
 Amara Mining plc 
  John McGloin, Chairman and Chief Executive 
  Officer 
  Pete Gardner, Finance Director 
  Katharine Sutton, Head of Investor            [phone] 
  Relations                                               1420 
 Peel Hunt LLP 
  (Nominated Adviser & Joint Broker) 
  Matthew Armitt                                [phone] 
  Ross Allister                                           8900 
 GMP Securities Europe LLP 
  (Joint Broker) 
  Richard Greenfield                            [phone] 
  Alex Carse                                              2800 
 Farm Street Communications 
  (Media Relations)                                +44 (0)7593 
  Simon Robinson                                       340 107 
 

About Amara Mining plc

Amara is a gold explorer/developer with assets in West Africa. The Company is focused on unlocking the value in its development projects. At Yaoure in Côte d'Ivoire, this will be done by increasing the confidence in the existing Mineral Resource and economics at the project as the Company progresses it through to Pre-Feasibility Study and Bankable Feasibility Study. At Baomahun, this will be achieved by gaining an improved understanding of the exploration upside potential and underground opportunity. With its experience of bringing new mines into production, Amara aims to further increase its production profile with highly prospective opportunities across both assets.

The RC and DD drilling programmes at Yaoure were undertaken by two independent drilling contractors. Typically samples for assaying were taken at one metre intervals. Sample preparation was carried out at the Company's facility at Yaoure, prior to fire assay at Actlabs in Ouagadougou, Burkina Faso. The samples were crushed down to minus 2mm and then pulverised down to 90% passing 75 microns, prior to analysis for gold by 50g fire assay. As part of the Company's QA/QC procedures, internationally recognised standards, duplicates and blanks were inserted. Check assays are being carried out at ALS Geochemistry in Johannesburg, South Africa and Vancouver, Canada. The laboratories used are independent of the Company.

Peter Brown is a "Qualified Person" within the definition of National Instrument 43-101 and has reviewed and approved the information contained within this announcement. Dr Brown (MIMMM) is the Group Exploration Manager.

Mario Rossi is a "Qualified Person" within the definition of National Instrument 43-101 and is responsible for the estimation of the Yaoure Mineral Resource. He has reviewed and approved the relevant technical information relating to the resource estimates in this release. Mr Rossi (Fellow AusIMM, Member CIM, Member SME) is Principal Geostatistician of GeoSystems International, Inc.

Adam Wheeler is a "Qualified Person" within the definition of National Instrument 43-101 and is responsible for pit optimisation aspects of the Yaoure Mineral Resource. He has reviewed and approved the relevant technical information relating to the resource estimates in this release. Mr. Wheeler (Fellow IOM(3) , C.Eng) is an Independent Mining Consultant.

Appendix 1: Yaoure's Geology

Yaoure is a structurally controlled, mesothermal, quartz-carbonate vein-style gold deposit hosted by Early Proterozoic (Birimian) basaltic metavolcanics, granodiorite intrusions and subvolcanic intrusive rocks, at greenschist facies metamorphic grade.

The North-South trending CMA mineralisation is a discrete continuous body, on average 13m thick, within a 20m to 45m wide brittle-ductile shear zone, dipping between 24 degrees and 30 degrees to the east. The North-South trending Yaoure Central mineralization is a 200m (150-250m) thick zone, approximately 140m (70-220m) below the CMA zone, dipping at approximately 30 degrees to the east. The Yaoure Central mineralisation reaches its peak under the Yaoure Central pit where the moderately dipping Yaoure Central zone intersects a subvertical N-S trending granodiorite stock. The principal mineralised zones at both Yaoure Central and in particular at CMA, are centred on low-angle, brittle-ductile, reverse shear zones which acted as first-order conduits for hydrothermal fluid flow.

Appendix 2: Mineral Resource Classification

The Yaoure Mineral Resource classification was developed in two stages:

1. The conditions for Measured, Indicated, and Inferred categories were defined based on the data spacing, the geologic model, and the amount of information used to estimate each block. These criteria were expressed in simple terms, such as the number of holes and composites required to exist within specific distances and orientations for each category.

2. The classification was implemented through the estimation passes aided by other algorithms applied on the block model that reflect the criteria defined in the previous step.

Appendix 3: Resource Estimation Parameters

1. The estimates of Mineral Resources were calculated in accordance with the definitions adopted by the Canadian Institute of Mining Metallurgy and Petroleum ("CIM") and incorporated into NI 43-101. The Mineral Resource estimate was carried out by Mario Rossi of GeoSystems International, Inc.

2. Block model preparation and resource estimation has been completed using Datamine and GSLib. One-metre primary samples were used to define mineralised outline wireframes, whilst two-metre down hole composites were used for statistical analysis, variography and resource estimation. High grade capping depended on the estimation method used.

3. Resource estimation has been completed using a combination of Multiple Indicator Kriging (MIK), Indicator-modified Ordinary Kriging, and Inverse Distance Cubed, depending on the estimation domain. Bulk density has been estimated into the block model using Ordinary Kriging.

4. Ounces represent estimated gold content present in the tonnes of material which would be mined and processed once they are converted to a Mineral Reserve. Mining recovery, dilution and mill recovery rates have not been applied in calculating the contained ounces.

5. In accordance with the guidelines set out by the CIM and contained within NI 43-101, this Mineral Resource estimate for the Yaoure property uses a 0.5 g/t Au cut-off and a US$1,500/oz Au "Resource Pit" to represent that portion of the resource which has "reasonable prospects for economic extraction" from an open pit mining scenario. The open pit mining scenario considers that both oxides and sulphides assuming a Carbon-in-Leach process plant economics. Pit slopes are 44 in oxide, 53 in sulphide; and metallurgical recoveries have been assumed at 90%. The pit optimisation was carried out by Adam Wheeler, Independent Mining Consultant.

6. Amara's attributable portion of the Mineral Resource estimate is 100%, although on development the Government of Côte d'Ivoire will be entitled to a 10% free carried interest.

7. The classification methodology used was based on a combination of drill density, data quality, and evaluations of the statistical and spatial characteristics of the gold mineralisation.

   8.    Glossary 

A "Mineral Resource" is a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.

An "Inferred Mineral Resource" is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.

An "Indicated Mineral Resource" is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.

A "Measured Mineral Resource" is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.

The above definitions of "Mineral Resource", "Inferred Mineral Resource", "Indicated Mineral Resource", and "Measured Mineral Resource" conform to CIM Definition Standards - For Mineral Resources and Mineral Reserves, as prepared by the CIM Standing Committee on Reserve Definitions, and adopted by CIM Council on May 10, 2014, and as required by National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators.

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