Kibo Mining Plc Q3 Quarterly Update (5193E)

TIDMKIBO

RNS Number : 5193E

Kibo Mining Plc

05 November 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: IE00B97C0C31

("Kibo" or "the Company")

05 November 2015

Shareholder Operational Update: Third Quarter 2015

Kibo Mining Plc ("Kibo" or the "Company") (AIM: KIBO; JSE AltX: KBO), the Tanzania focused mineral exploration and development company, is pleased to announce an operational update for the third quarter 2015 (the "Quarter").

HIGHLIGHTS FOR THE QUARTER AND CEO COMMENTS

   -    Mbeya Coal to Power Project ("MCPP") : 

ü Joint Development Agreement ("JDA") between Kibo and SEPCOIII becomes unconditional

ü Completion of Mining Pre-feasibility Study on MCPP; project fundamentals surpassed earlier Concept Study report

ü Power component of the MCPP advanced in terms of partner participation and planning for definitive feasibility study

ü Significant progress in negotiation and planning with respect to Financial Close for the MCPP, which is approaching completion

- Haneti geophysical interpretation results indicate nickel sulphide prospective rocks are significantly more extensive than previously thought; and identifies additional drill targets

- Exploration work on the Company's two Joint Ventures with Metal Tiger PLC commenced (Morogoro and Pinewood)

   -    Highlights from interim results for the period ended 30 June 2014: 

ü Decrease in trade and other payables of 311%; and

ü Placing funds of GBP526,000, locked down since March due to appointment of Administrator to Company's former broker (Hume Capital), to be released to Kibo within two months

Louis Coetzee, C.E.O. of Kibo Mining commented:

"2015 has been one of the most difficult periods in recent history for junior mining companies. Kibo has however been able to not only weather the storm, but has consistently advanced all the Company's projects. This quarterly update demonstrates that the Company increased its momentum despite trying times.

The Company's cash flows have been carefully managed following Hume being placed under administration. The delay in receiving the placing funds as a result of this had no impact on Kibo's operations and all uncertainty with regard to receipt of the funds has since been removed.

The MCPP advanced significantly, and this is best reflected in the continued progress made towards concluding critical commercial arrangements for the project to ensure optimal value creation on the Company's flagship asset. These efforts were in turn strongly supported by the ongoing feasibility work that is still continuing at pace. With the most important strategic elements now in place for the MCCP, Kibo is now focussing its entire effort on achieving Financial Closure for this world class project.

Both the Metal Tiger joint ventures are active and making good progress. The Morogoro Project holds significant potential to host economically viable deposits and in the Pinewood Project Kibo provides exposure to the potential for a resurgence of interest in the Uranium sector.

Significant breakthroughs were made at Haneti, with the interpretation and modelling of the data that produced exciting results, showing the HIUC rocks occur over a far greater strike length than previously thought. This work enabled the prospectivity of Haneti for nickel sulphide mineralisation to be enhanced significantly, at minimum cost, and provides a more detailed picture of the sub-surface extent and geological structure."

KIBO OPERATIONS AND PROJECTS - DETAILED UPDATE FOR QUARTER 3

Hume Update

Pursuant to the terms of a notice (the "Notice") to clients (including Kibo) dated 20th August 2015 on the procedures pertaining to the distribution of the Client Money Pool, the Joint Special Administrators of Hume Capital notified Kibo that monies will be distributed by earliest on the 2nd October 2015 (the "Date of Proving"), but no later than within two months from the 2nd October 2015.

As previously announced, Kibo understands that substantially all of the GBP526,000 (representing the consideration for 10,520,000 shares which were to be issued to third party investors) which had been paid into Hume Capital's client money account, will be released to Kibo, less a small proportion representing costs of the administration.

Mbeya Coal to Power Project

JDA

Kibo announced on 21 July 2015 that all conditions precedent in the JDA recently signed between the Company and SEPCO III, have subsequently been met in full and that the JDA now enjoys unconditional status, marking another crucial progressive milestone in the development of the MCPP. This will allow Kibo to conduct and complete the MCPP BFS at pace and to the highest international standard.

Mining:

The Mining Pre-Feasibility Study which comprises Phase 1 of the Mbeya Definitive Mining Feasibility Study ("MDMFS") was completed during July 2015. The study delivered decisive results across all technical and environmental parameters. Mining efficiency and effectiveness will be enhanced with the mechanised continuous surface miner having proved to be a viable option and, the suitability of the overburden to be stripped by free digging,. The use of the continuous surface miner also indicates a significant positive environmental impact by eliminating washing of coal, whilst free digging avoids the use of explosives and blasting. The fact that the project's mine design avoids river diversion (as opposed to the earlier design assumption) is a further significant positive environmental impact. The key technical conclusions from the PFS were:

- Selected mining method - modified terrace mining method, with overburden 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 and Mine Design

- Four alternative mining options for the selected mining method identified, with the Project financially feasible for all of the options investigated.

The Company and its advisers Minxcon Projects, after having completed a financial optimization study subsequent to the latest MCPP mining feasibility results, and assessing the impact of optimal gearing for the MCPP coal mine based on the surface miner contractor option, announced on 12 October 2015 the following :

- All-in cost margin ranges from 47.9% to 48.1%. Applying the aforementioned all-in cost margin, Kibo interprets that annual earnings before interest and tax ("EBIT") of between US$ 23.5 million to US$ 23.6 million will be generated;

- Applying a real discount rate of 5.51%, the best estimated Net Present Value ("NPV") of free cash flow to equity ranges between US$ 214 million and US$ 219 million;

   -     Equity IRR (leveraged) range between 131% and 146%, with a Project IRR of 54%; 
   -     Cash return on capital invested ranging between 726% and 732%; and 
   -     Project Payback Period before loan of 2.6 years. 

Kibo announced on 15 October 2015, completion of Phase 1 of the Mbeya Definitive Mining Feasibility Study (MDMFS). This phase, a geotechnical drilling programme, was a critical work stream of the final Stage of the broader Mbeya Coal to Power Project, Mining Feasibility Study, and included:

   -    820 meter diamond core drill programme to confirm slope angles of pit design 

- Metallurgical sampling programme to verify specific coal properties, required for detail design requirements of power station

- Additional data obtained from drill programme to enable restatement of Mbeya Coal Resource during Phase 2 of MDMFS

- Samples from the drilling programme are currently being analysed in the appropriate geotechnical and coal laboratories. Results of the laboratory analyses will be used as design inputs in both the mine and power designs

Power

- The Power PFS was completed by end of FY 2014. All planning and preparation for the next phases of the PFS is complete

- The process to facilitate permitting, certification and licensing, intensified during the reporting period, with increased interaction and negotiations with TANESCO and the Ministry for Energy and Minerals ("MEM")

- The planned continuation of the Definitive Power Feasibility Study ("power DFS") was briefly interrupted during the period required to ensure that the JDA reaches unconditional status by end of Q2. Substantial planning and preparation regarding technical and developmental work was however done in the meantime which included

ü Defining the full Scope of the Power Feasibility Study

ü Defining roles and responsibilities for the Power Feasibility Scope of Work

ü It is expected that the Power DFS will immediately resume full operational status upon completion of the above process.

Imweru Project (Gold)

As the gold market continues to experience significant downward price pressure, the Company is currently proceeding cautiously with its gold projects, pending improved market gold sentiment. The Imweru DFS is being continued at a reduced pace.

Morogoro Project (Gold)

The Morogoro soil sample batch laboratory analysis was integrated into existing geological reports. A revised exploration programme is under review by the joint venture partners. As reported earlier, this exploration program, together with ongoing regional mineral potential evaluation work is aimed to test the gold anomalies identified in the Ruvu Nappe area in 2012 and includes an early stage exploration drilling programme. The sampling results re-confirmed Block A as the first priority target of the exploration program. Going forward, the following activities are planned:

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- Follow up detailed soil geochemistry over targets identified in Matombo region (Block A southern strike extension)

   -    Exploration pits and trenches in the Matombo area 
   -    Ground magnetic survey over Matombo area, Block A and southern extension 
   -    First pass exploration drilling in the Matombo area, Block A 
   -    Detailed geological mapping to continue in all areas 
   -    Recognisance mapping the areas west of Morogoro 
   -    Stream sediment sampling and rock chip sampling in the areas west of Morogoro 

The exploration programme schedule, upon approval of the programme by the joint venture partners should run for approximately 7 months.

If the outcome of the above programme is satisfactory, the programme would be regarded as ready and justified for a follow - up phase of Resource Delineation drilling.

Lake Victoria Project - (Excluding Imweru)

As the gold market continues to experience significant downward price pressure, the Company is currently proceeding cautiously with its gold projects pending improved market gold sentiment. Consequently work on the Company's early stage Lake Victoria projects was kept to the minimum required for care and maintenance during the period.

Pinewood Project (Uranium)

Work on the Pinewood Joint Venture Project commenced during the Quarter. It comprised a review and update of the historic technical reports prepared in respect of the Pinewood portfolio and existing uranium deposits in the region to assist in designing and implementing the next field exploration campaign.

Haneti Programme

Kibo has received the final report from an independent Airborne Geophysical Data Interpretation carried out over its Haneti project in central Tanzania. The results from the preliminary findings were announced on the Company's RNS dated 24 June 2015.

- The final report confirms the location, strike extent and internal structure of two newly interpreted composite mafic-ultramafic zones extending significantly the previously known "footprint" of the Haneti-Itiso Ultramafic Complex (HIUC);

- The newly outlined mafic-ultramafic zones, with strike lengths of approximately 30 km (Southwest Zone) and 10-20 km (Northwest Zone) occur to the Southeast and the Northwest of the central 80 km long (strike length) HIUC respectively and may represent folded repetitions and fault off-set extensions of the HIUC;

   -    Modelling of the high magnetic anomaly over the Mihanza drill prospect shows that the magnetic susceptibility increases with depth and the prospective rocks extend to 800 m which indicates the potential for a significant volume of nickel prospective target rock at this location alone; 

- The data from the geophysical study will continue to be evaluated both in-house and by the Company's consultants to assist with geological modelling, new ground acquisition exploration targeting and exploration programme design.

Contacts

 
                       [phone]       Kibo Mining       Chief Executive Officer 
     Louis Coetzee                                  plc 
--------------------  -------------------  --------------------  ------------------------ 
   Andreas Lianos      [phone]       River Group          Corporate Adviser 
                                                                   and Designated Adviser 
                                                                           on JSE 
--------------------  -------------------  --------------------  ------------------------ 
     Jon Belliss        [phone]     Beaufort Securities           Broker 
                              8300                Limited 
--------------------  -------------------  --------------------  ------------------------ 
    Oliver Morse        [phone]         RFC Ambrian          Nominated Adviser 
                                                  Limited                  on AIM 
--------------------  -------------------  --------------------  ------------------------ 
                                              Bell Pottinger        Investor and Media 
   Daniel Thöle     [phone]                                 Relations 
     / Anna Legge              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.

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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.

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