Angel Mining PLC Trading Update (0575I)

TIDMANGM

RNS Number : 0575I

Angel Mining PLC

19 July 2012

ANGEL MINING PLC

("Angel Mining" or the "Company")

AIM: ANGM

TRADING UPDATE

The Board of Angel Mining, the Greenland-focused mining and exploration company, is pleased to provide shareholders with the following trading update:

Highlights

-- Based on a projected average gold price received of US$1,575/oz, the Nalunaq gold mine is projecting revenues of US$44.5 million over the next twelve months, subject to receipt of the permit for partial pillar extraction;

-- A joint exploration project with Nuna Minerals is being considered, to determine whether there are other gold deposits in the same mountain as the Nalunaq mine; and

-- The Company has been investigating the potential benefits of in-situ hydro power at Black Angel to replace its oil fired generators.

Nalunaq

Production

On 29(th) May 2012, the Company advised shareholders it had ceased mining in South Block as it had encountered serious faulting, but since then production has continued without a break, using material mined in the Mountain Block, which has enabled cash generation to continue. Grades have been below the average expected for the mine but this is expected to change once pillar mining commences and production should then be within the target range of 1,500oz to 2,000oz Au per month.

To achieve the new production plan at Nalunaq, the following steps are necessary:

1. The permit from the Greenland Bureau of Minerals and Petroleum ("BMP") to part mine the pillars;

2. A second long-hole drill, which has already been purchased, and should arrive at the site before the end of August;

3. Relining of the ball mill. New liners are currently being manufactured and should be onsite before the end of August;

4. A larger jaw crusher to deal with the existing inventory of oversize ore. A unit has been purchased from EMJ-Atcom and it should arrive onsite this week;

5. The crushing circuit needs to be capable of feeding the ball mill at its rated capacity of 10 tons per hour. Management believe this can be achieved by placing the new jaw crusher at the top of the ore pass, which feeds directly into the crushing circuit. The plant crushing circuit is currently supplemented by crushing outside the mine with a mobile cone crusher, and then feeding the material into a ball mill feed hopper. This process is quite inefficient. and the new arrangement is expected to be a big improvement and transform winter operations.

Resource

The team at Nalunaq has just completed a detailed volumetric survey and grade of all mineable material that can be identified at each level in the mine. This exercise has identified 68,800 tonnes of ore with an average grade of 15.04 grams Au per tonne. This figure includes 29,500 tonnes of ore which can be safely recovered from the pillars, as confirmed in the report prepared for the Company by Golders Associates earlier this year. Note: the estimates of resource quoted above are based upon internal estimates and have not been independently verified.

The report supported the application to the BMP for permission to mine the pillars, which was presented to the BMP on 7(th) March 2012. The BMP have indicated that the response to the application should be received within the next two weeks.

The 68,800 tonnes of ore, referred to above, should enable the plant to produce approximately 28,300 ounces of gold in the next 12 months and at the current gold price of US$1,575 per ounce, this would generate US$44.5 million of sales.

The resource referred to above does not include any additional material that might be discovered as the Company mines the Mountain Block. This part of the mine is at the top of the mountain and it has not been possible to undertake core drilling from the surface due to the difficult terrain. The Company's geologists believe there are likely to be further deposits of very high grade material to be found there, similar to the ore we are currently being recovered from that part of the mine.

Exploration Plan

Nuna Minerals A/S is a highly regarded Greenlandic exploration company which made the original discovery of gold at Nalunaq. They have established a large gold area in the south of Greenland, and they have just completed their summer gold exploration drilling programme in the Nalunaq region. Indeed, they used Nalunaq as their base camp.

Their CEO, Ole Christiansen has suggested that, in his opinion, it is highly likely there will be other gold bearing intrusions in the same mountain as Nalunaq and he has proposed a simple and inexpensive joint exploration project to see if Nuna's geologists, working with Nalunaq's geologists, can find evidence of further outcrops of such intrusions. If this were so, it could lead to more serious exploration activity next year and if Mr. Christiansen's theory is correct there may be further gold mining opportunities for the Company to exploit at Nalunaq. Should this project proceed, we will provide further details to the market when appropriate.

The Team

Alex Hamilton has been appointed General Manager with immediate effect. Alex has been plant manager at Nalunaq since mid May 2011 and has been responsible for getting the plant to the point where it is capable of operating at target throughput and recovery efficiency.

Gordon McClure has been appointed Head of Mining. He is an energetic and experienced hard rock miner who has been an effective deputy to Steve Ainsworth since January 2012. Gordon's deputy is Steve Dash who was one of the first Cornish miners to join Angel Mining at Nalunaq back in January 2010.

Haraldur Haraldsson has been appointed Health & Safety Officer and Environmental Superintendent.

Together with the existing appointees, Management is confident we have now assembled a very strong team with many years of experience and proven technical expertise.

The Company's previous duty manager and Head of Mining, Steve Ainsworth, has recently left the Company to start work at a mine close to his home in Armenia. We are grateful to Steve for the excellent job he has done for Angel Mining since he joined last September, both in the areas of Health & Safety and in the development of the mining team. The Copmpany now has a robust Health & Safety policy which has been approved by the BMP, with detailed risk assessments established for all critical mining and process plant roles. Angel Mining also have three mining teams with strength in depth. We wish Steve well in his new role.

Black Angel

Finance

Zinc and lead prices remain below US$2,000 per tonne and to attract finance the Company is making every effort to keep operating costs as low as possible to improve the financial attractiveness of the project.

Fuel oil is projected to account for over 25% of the cash cost of production, amounting to approximately US$10.5 million per year, and represents an important area for potential cost savings through the possible alternative use of hydro-electricity. A detailed study undertaken in 1979 by Cominco showed that water from South Lake should be sufficient to generate 9MW of power. This would be more than enough to supply the needs of the Black Angel process plant and all other site power needs, with the exception of mobile equipment. Clearly there would be a significant increase in capital expenditure, but operating costs would be much reduced throughout the long life of the mine. The Company will be inviting detailed quotes from specialist design and construction suppliers for hydro-electric plants over the coming months.

The Company has referred many times to the JORC compliant resource statement produced by Wardell Armstrong International in 2007, which confirmed a resource of 4.425 million tonnes of medium to high grade zinc ore. The resource identified by an extensive drilling programme in the 1970s and 1980s by Cominco is unfortunately now not capable of being integrated with the existing JORC compliant data, but a report prepared in 2007 and written by Dr. Robert Dowdell, estimates a resource of 2.6 million tonnes of high grade ore. Even though this resource statement does not comply with JORC standards, Management believes it does help to demonstrate that at an extraction rate of 250,000 tonnes per annum, the Black Angel mine could have a life expectancy of 28 years.

Nicholas Hall, CEO, commented: "My latest visit to Greenland has confirmed we are making great progress at our Nalunaq gold mine. We have reorganized our team and morale on site is excellent. The resultant cost savings and our detailed measurement of the resource base means we potentially have the ability to generate enough cash to repay the Company's existing debt balance and also to make a worthwhile contribution to the funding requirements of Black Angel.

Our Black Angel project continues to develop as further innovative ideas emerge. The latest proposal we are investigating is the possibility of generating hydro electricity onsite, which would significantly reduce operating costs and help make the mine a a very environmentally efficient mining operation. The capital cost of doing so is still being evaluated.

In summary I am becoming increasingly confident of our ability to deliver real shareholder value."

Enquiries:

 
  Angel Mining plc 
    Nicholas Hall, Chief Executive 
     Officer                             07931 709 053 
    Kevin McNair, Chief Financial 
     Officer                              07900 690 908 
   Fox-Davies Capital (Nominated 
    Adviser & Broker) 
    Daniel Fox-Davies 
    Simon Leathers                        0203 463 5010 
   Bishopsgate Communications Limited 
    Nick Rome                             0207 562 3350 
 

Background to Angel Mining

Nalunaq

The Company first poured gold at Nalunaq on 27(th) May 2011 following final commissioning of the processing plant and is targeting optimal production of approximately 18,000 oz per annum, thereby providing the Company with cash flow which will be dedicated to funding development at Black Angel, further exploration at Nalunaq and reducing debt. Angel Mining owns the only operational gold mine in the region and anticipates its plant may be suitable for processing ore from other gold mining companies in the region in the future. It may therefore enter into toll treatment arrangements with other potential gold mining activities in the region where appropriate.

Black Angel

The Black Angel project is a high grade zinc/lead project based around a previously developed mine in the north of Greenland, which includes three sets of zones within the mine and three satellite deposits which have been explored.

 
Summary of Black Angel Mineral Resources (JORC) as of 31 December 2007 
====================================================================================== 
                      Category    Tonnage  Zinc  Lead  Silver (g/t)  Mineable reserves 
                                    (kt)    (%)   (%)                       (kt) 
====================  ==========  =======  ====  ====  ============  ================= 
Angel Zone            Indicated     791    13.0  4.5       25.0             218 
====================  ==========  =======  ====  ====  ============  ================= 
Cover Zone            Indicated     522    8.3   2.4       18.0             231 
====================  ==========  =======  ====  ====  ============  ================= 
Other zones within 
 the Black Angel 
 mine                 Indicated     697    10.4  3.3       13.0              - 
====================  ==========  =======  ====  ====  ============  ================= 
South Lakes Glacier   Indicated    1,726   6.9   2.5       14.5              - 
====================  ==========  =======  ====  ====  ============  ================= 
Ark                   Inferred      492    4.7   2.2       20.4              - 
====================  ==========  =======  ====  ====  ============  ================= 
Nunngarut 2           Indicated     196    9.0   3.4       31.0              - 
====================  ==========  =======  ====  ====  ============  ================= 
Nunngarut 2           Inferred       1     4.5   1.9       9.0               - 
====================  ==========  =======  ====  ====  ============  ================= 
Total                              4,425                                    449 
================================  =======  ====  ====  ============  ================= 
Source: Wardell Armstrong International Ltd. 
====================================================================================== 
 

The project consists of three phases:

Phase I: Complete the rehabilitation of infrastructure to allow access to the mine, the mine camp and related facilities.

Phase II: Complete the detailed review of the pillar extraction programme within the Angel and Cover Zones, including construction of the process plant and related systems to allow for the shipment of concentrate from the site.

Phase III: Develop a further exploration programme for the existing JORC resources at the Ark and Glacier deposits as well as identified mineralization at Deep Ice, Nunngarut and a number of other exploration targets within the license area (see the announcements made by the Company on 6(th) June 2006 titled "Black Angel 2006 Resource Statement" and on 30(th) November 2007 titled "Black Angel 2007 Resource Statement").

Dr. Bob Dowdell is the qualified person who has reviewed and approved the technical information contained in this announcement. Dr. Dowdell holds a BSc and Doctorate in Mining Engineering from Newcastle University and is a Chartered Engineer and a Member of the Institute of Mining and Metallurgy. Dr Dowdell is a Competent Person for the purposes of the AIM Guidance Note on Mining, Oil and Gas Companies dated June 2009.

More information on the Company is available on the website, please click here: http://www.angelmining.com/

This information is provided by RNS

The company news service from the London Stock Exchange

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