ASA Resource Group PLC Quarterly Update (9106F)

TIDMASA

RNS Number : 9106F

ASA Resource Group PLC

17 November 2015

Quarterly update

17 November 2015

(Q2 FY2016 - quarter ended 30 September 2015)

Asa Resource Group PLC

("Asa Resource", the "Group" or the "Company")

Asa Resource is pleased to provide an update on operations and exploration activity for the quarter ended 30 September 2015.

OPERATIONAL HIGHLIGHTS

Gold - Freda Rebecca Gold Mine (Zimbabwe)

   --      Tonnes milled increased by 5% to 309,102t in Q2 FY2016 (Q1 FY2016: 293,759t) 
   --      The average feed grade for Q2 FY2016 increased by 6% to 2.15g/t (Q1 FY2016: 2.03g/t) 

-- Gold recovery rate for Q2 FY2016 increased by 2 percentage points to 84% (Q1 FY2016: from 82%)

-- 18,067oz of gold produced in Q2 FY2016 (Q1 FY2016: 16,985t). The 6.4% production increase was mainly attributable to improvements in feed grade, tonnes milled and recoveries

-- C1 cash costs were 7% lower in the quarter under review at US$870/oz (Q1 FY2016: US$930/oz). All-in sustaining C3 costs were reduced by 6% to US$1,023/oz (Q1 FY2016: US$1,093/oz)

   --      The average gold price received in Q2 FY2016 was US$1,121/oz (Q1 FY2016: US$1,186/oz) 

Nickel - Trojan Nickel Mine (Zimbabwe)

-- Production of nickel in concentrate rose in Q2 FY2016 by 7% to 1,442t (Q1 FY2016: 1,349t), primarily due to an increase in average head grade and recoveries

   --      Head grade was 31% higher at 1.62% (Q1 FY2016: 1.24%) 
   --      Recovery was 4% higher at 87.6% (Q1 FY2016: 84.0%) 

-- The average net realised nickel in concentrate price was US$6,847/t (Q1 FY2016: US$8,461/t), reflecting a 19% fall in global nickel prices this quarter

   --      Nickel sales were 18% higher at 1,494t (Q1 FY2016: 1,267t) 

-- C1 cash costs for nickel in concentrate dropped by 23% to US$6,895/t (Q1 FY2016: US$8,901/t), and all-in sustaining C3 costs of nickel in concentrate dropped by 23% to US$7,539/t (Q1 FY2016: US$9,736/t)

Diamonds - Klipspringer (South Africa)

-- Klipspringer's throughput of Marsfontein fine residue tailings increased by 36% to 52,797t (Q1 FY2016: 38,760t)

   --      Diamonds recovered improved by 118% to 37,385cts (Q1 FY2016: 17,176cts) 
   --      Diamond sales increased by 102% quarter-on-quarter to 34,560cts (Q1 FY2016: 17,099cts) 

-- The price received for fine diamonds produced by the mine fell by 8% quarter-on-quarter from $16.62/ct (Q1 FY2016: $18.11/ct). This was in line with market conditions

EXPLORATION HIGHLIGHTS

Gold - Zani-Kodo (Democratic Republic of Congo - DRC)

-- Exploration activity was focused in field assessment of several target areas, and two new targets, Kepira and Kodo West, have been identified with two potentially mineralised zones present

Copper/Cobalt - SEMHKAT/Hailiang JV (Democratic Republic of Congo - DRC)

   --      Exploration programmes are in progress at Kawesitu, Mwombe, Kibolwe East, Lufira and PR763 

Mr Yat Hoi Ning, the Company's Executive Chairman commented:

With new management now firmly in place, operations during the financial year's second quarter have started to improve with gold production 5% higher quarter on quarter at the Freda Rebecca mine and nickel concentrates 7% higher at Bindura Nickel's Trojan mine. I remain confident that this pattern of steady improvement will persist until operating targets are reached.

At both mines the operational focus has been on containing or reducing unit costs in response to weakening metal prices and grade control - and this will be our strategy while prices remain depressed and after they recover to more-acceptable levels.

We have achieved these results by implementing a new mining plan at Trojan and improved grade control at Freda Rebecca. At the same time, the operating and overhead costs have been strictly controlled, again a process that will continue as metal prices move through and out of their current trough. The immediate, near-term outlook is for further price challenges.

On 29 September 2015, the Company successfully raised GBP2.92 million before expenses through an Open Offer. The proceeds from which have been used to further develop the Klipspringer diamond operation and general corporate purposes.

The company's new name, Asa Resources Group PLC, which reflects a broadening of our developmental horizons, has, I believe, inspired our people. Their initiative is again reflected in the past quarter's achievements in what have been difficult market conditions.

For further information please visit www.asaukplc.com or contact:

Asa Resource Group PLC:

Yim Kwan, Finance Director or

Amilha Young, Group General Counsel and Company Secretary

Tel: [phone]

Nominated Adviser

Grant Thornton UK LLP

30 Finsbury Square, London EC2P 2YU

Colin Aaronson/Richard Tonthat/Carolyn Sansom

Tel: [phone]

Financial Adviser and Corporate Broker

Cantor Fitzgerald Europe

1 Churchill Place, Canary Wharf, London E14 5RB

Stewart Dickson/Jeremy Stephenson /Patrick Pittaway

Tel: [phone]

Public Relations:

Russell and Associates (South Africa) Tel: [phone]

Leigh King: email: [e-mail]

Jim Jones: email: [e-mail]

OPERATIONS

Gold - Freda Rebecca (Zimbabwe)

 
Freda Rebecca                  Quarter     Quarter      Quarter    Quarter 
 Gold Mine                       ended       ended        ended      ended 
                             Sept 2015   June 2015   March 2015   Dec 2014 
------------------  ------  ----------  ----------  -----------  --------- 
Tonnes mined          t        336,026     351,202      256,459    296,085 
------------------  ------  ----------  ----------  -----------  --------- 
Tonnes milled         t        309,102     293,759      297,953    322,216 
------------------  ------  ----------  ----------  -----------  --------- 
Head grade           g/t          2.15        2.03         1.81       1.89 
------------------  ------  ----------  ----------  -----------  --------- 
Recovery              %             84          82           83         76 
------------------  ------  ----------  ----------  -----------  --------- 
Gold sales            oz        18,067      16,985       13,443     14,298 
------------------  ------  ----------  ----------  -----------  --------- 
Average gold 
 price received     US$/oz       1,121       1,186        1,223      1,195 
------------------  ------  ----------  ----------  -----------  --------- 
Cash cost (C1)      US$/oz         870         930        1,234      1,118 
------------------  ------  ----------  ----------  -----------  --------- 
All-in sustaining 
 cost (C3)          US$/oz       1,023       1,093        1,430      1,304 
------------------  ------  ----------  ----------  -----------  --------- 
 

Figures shown are unaudited and may vary upon final audit.

-- C1 cash cost includes costs for mining, processing, administration, accounting movements for stockpiles and gold-in-circuit, and, net proceeds from by-product credits. It excludes capital costs for exploration, mine development or processing mill capital works and royalties

-- C3 all-in sustaining cost reflects C1 costs plus depreciation and amortisation, thus incorporating the capital cost of production plus interest, other indirect costs and royalties. All-in sustaining costs represents all costs attributable to gold production over the period

Commentary

Tonnes mined for the quarter under review declined by 4% to 336,026t from 351,202t in Q1 FY2016. The reduced tonnage was due to lower availability of loading and hauling fleet.

Q2 FY2016 gold production increased by 6% to 18,067oz compared to 16,985oz in the previous quarter as a result of increases in feed grade, milled tonnes and recovery. Tonnes milled rose by 5% to 309,102t in Q2 FY2016 (Q1 FY2016 - 293,759t) on the backdrop of a 6% increase in mill running time.

The feed grade for Q2 FY2016 increased by 6% to 2.15g/t from 2.03g/t in Q1 FY2016. The increase in feed grade is due to better ore body definition as established by the infill evaluation drilling.

Gold recovery rate for Q2 FY2016 increased by 2 percentage points to 84% from 82% in the previous quarter. The increase is attributable to the increase in feed grade and reduction in loss of fine carbon to tailings.

C1 cash costs for the quarter under review decreased by 6% to US$870/oz from US$930/oz in Q1 FY2016. The drop in C1 cash cost is attributable to a 6% increase in gold production. The all-in sustaining costs decreased by 6% from $1,093/oz in Q1 FY2016 to $1,023/oz.

Nickel - Trojan Nickel Mine (Zimbabwe)

 
Trojan Mine                  Quarter    Quarter    Quarter    Quarter 
                               ended      ended      ended      ended 
                            Sep 2015   Jun 2015   Mar 2015   Dec 2014 
------------------  -----  ---------  ---------  ---------  --------- 
Tonnes mined          t       95,802    130,492    142,582    155,129 
------------------  -----  ---------  ---------  ---------  --------- 
Tonnes milled         t      101,701    129,523    140,045    148,712 
------------------  -----  ---------  ---------  ---------  --------- 
Head grade            %         1.62       1.24      1.669      1.156 
------------------  -----  ---------  ---------  ---------  --------- 
Recovery              %         87.6         84       86.9       80.5 
------------------  -----  ---------  ---------  ---------  --------- 
Ni in concentrate     t        1,442      1,349      2,032      1,383 
------------------  -----  ---------  ---------  ---------  --------- 
Nickel sales          t        1,494      1,267      2,072      1,395 
------------------  -----  ---------  ---------  ---------  --------- 
Average nickel 
 price              US$/t      6,847      8,461      9,489     10,313 
------------------  -----  ---------  ---------  ---------  --------- 
Cash cost (C1)      US$/t      6,895      8,901      6,926     10,666 
------------------  -----  ---------  ---------  ---------  --------- 

(MORE TO FOLLOW) Dow Jones Newswires

November 17, 2015 02:00 ET (07:00 GMT)

All-in sustaining 
 cost (C3)          US$/t      7,539      9,736      7,209     11,491 
------------------  -----  ---------  ---------  ---------  --------- 
 

Figures shown are unaudited and may vary upon final audit.

-- C1 cash cost per tonne includes costs for mining, processing, administration, offtake costs and penalties, transport costs, accounting movements for stockpiles, and net proceeds from by-product credits. It excludes capital costs for exploration, mine development or processing mill capital works, and, the cost of royalties

-- All-in sustaining C3 cost reflects cash cost per tonne plus depreciation and amortisation, thus incorporating the capital cost of production, plus interest, other indirect costs and royalties. All-in-sustaining cost represents all costs attributable to nickel production over the period

-- Note: the company has amended the reporting of the nickel price received, cash cost and all-in sustaining cost. The average nickel price received reflects the actual price received rather than the actual average price for the quarter as previously reported. Cash costs and all-in sustaining costs are now reported as actual costs incurred, previously these costs were adjusted for the opportunity cost forgone as a result of selling a nickel concentrate rather than a nickel cathode

Commentary

Mined tonnage was 27% lower at 95,802t (Q1 FY2016: 130,492t). Milled tonnage was mostly affected by, planned shutdown in July due to service winder upgrade, limited number of active draw points, longer scooping cycles and locomotives breakdown. Production is expected to increase in the third quarter following adoption of 30K production plan driven by a focus on massive extraction.

Head grade was 31% higher at 1.62% (Q1 FY2016: 1.24%) this was mainly due to deliberate focus on moving high grade areas such as massive in 37-1L and pod in 33-1L during the month of August and September.

Nickel recovery was 4% higher at 87.6% (Q1 FY2016: 84%) due to increased sulphide nickel in high grade ore coupled with steady plant conditions during the quarter. Nickel production was 7% higher at 1,442t (Q1 FY2016: 1,349t) due to high grade ore treated compared to the previous quarter.

Average nickel price recovered decreased by 19% to US$6,847 (Q1 FY2016: $8,461). Nickel prices continue to decrease during the quarter. Analysts do predict an improvement in the nickel price as demand is expected to increase though the timing of this is unknown.

C1 cash costs of nickel in concentrate dropped by 23% to US$6,895/t from US$8,901/t Q1 FY2016, and all-in sustaining C3 costs of nickel in concentrate dropped by 23% to US$7,539/t in the quarter under review, from US$9,736/t in Q1 FY2016. This was as a result of higher nickel metal production, a reduction in quantity of ore mined and processed. The above was driven by a focus on an increase in mining high grade areas, which resulted in a decrease in variable costs and the production of more metal at a lower unit cost. Furthermore, the company has also implemented cost reduction initiatives to combat the lower nickel prices.

Diamonds - Klipspringer (South Africa)

 
Klipspringer                 Quarter    Quarter    Quarter    Quarter 
 Mine                          ended      ended      ended      ended 
                            Sep 2015   Jun 2015   Mar 2015   Dec 2014 
----------------  -------  ---------  ---------  ---------  --------- 
Tonnes treated       t        52,799     38,762     43,504     49,939 
----------------  -------  ---------  ---------  ---------  --------- 
ROM diamonds 
 recovered        carats      37,385     17,176     17,870     31,850 
----------------  -------  ---------  ---------  ---------  --------- 
Diamond sales     carats      34,560     17,099     11,748     44,200 
----------------  -------  ---------  ---------  ---------  --------- 
Average diamond 
 price            US$/ct       16.62      18.11      19.50      19.31 
----------------  -------  ---------  ---------  ---------  --------- 
 

Commentary

   --      The tonnages mined at Klipspringer improved due to rationalisation of mining and haulage 

-- The diamonds recovered increased due to improved delineation of the coarse tailings material

   --      The diamond price received remained static which reflects the current market conditions 

-- An ongoing review of the Klipspringer operations including the feasibility of re-opening the underground fissure mine is in progress

EXPLORATION

Gold - Zani-Kodo (Democratic Republic of Congo - DRC)

   --      Exploration activity was focused in field assessment of several target areas 

-- Two new targets, Kepira and Kodo West have been identified with two potentially mineralized zones present

-- Orientation grab sampling has been carried out in both areas with fieldwork and data compilation is ongoing

Copper/Cobalt - SEMHKAT/Hailiang JV (Democratic Republic of Congo - DRC)

Exploration programmes are in progress at Kawesitu, Mwombe, Kibolwe East, Lufira and PR763.

The following work had been completed during the quarter:

Kawesitu

   --      13 Shallow drill holes were completed for a total of 271m 
   --      Diamond drilling is ongoing with four holes completed for a total of 943m 
   --      No results have been received to date 

Mwombe (PR741)

-- Three prospects were identified in Mwombe by Hailiang, so called Small Zone, Mwombe West and Mwombe East:

   --      Small Zone 

o Geological mapping, soil gridding and profiling followed by trenching and IP sounding were conducted to identify the drill targets

o Six diamond holes were drilled for a total of 1,222m

o Two zones of copper mineralization were intersected with encouraging results

   --      Mwombe West 

o Geological mapping followed by trenching and IP sounding were conducted

   --      Mwombe East 

o Geological mapping, soil gridding and profiling followed by trenching and IP sounding were carried out

Lufira (PR756)

   --      Exploration programmes completed during the reporting period 

-- Geological mapping and drilling have confirmed that the existence of Lower Roan Formation, but no significant mineralization was intersected

ABOUT ASA RESOURCE GROUP PLC

Asa Resource Group Plc is a pan-African resources company with operations in Zimbabwe and South Africa, and a broad range of exploration projects and interests in the Democratic Republic of Congo (DRC), Angola and Botswana.

In September 2015 the Company changed its name from Mwana Africa plc to Asa Resource Group Plc to better reflect the Company's global strategy. The Group has a diverse asset base, including gold, nickel, copper, cobalt and diamonds and intends to diversify and reorganize its business along commodity lines as well as stimulating growth through global investment.

The group's primary listing is on the London Stock Exchange's AIM market and enjoys the strategic advantage of having supportive and influential shareholders in China. While the Company has been built on mining in Zimbabwe and South Africa, it is intended that its interests will be diversified beyond mining as well as geographically.

-- In Zimbabwe, Asa's interests are the Trojan and Shangani nickel mines and the Freda Rebecca gold mine. Asa's nickel and gold projects include Hunter's Road and Maligreen, with the Makaha deposit being a gold exploration prospect.

-- The Freda Rebecca gold mine in Zimbabwe restarted operations in 2009 and in the 12 months ended September 2015, produced 58,714oz of gold.

-- The Trojan nickel mine is owned by Asa's Zimbabwe subsidiary Bindura Nickel Corporation (BNC). After a four-year period of being under care and maintenance, in 2012 BNC carried out a US$23m restructuring and recapitalisation programme which allowed it to restart the Trojan mine. The first sale of nickel concentrate to Glencore plc took place in April 2013. In the 12 months ended September 2015, BNC produced 7,306t of nickel.

-- In the DRC, Asa has exploration programmes in Zani-Kodo (gold), Katanga (copper) and a 20% stake in Société Minière de Bakwanga (diamonds).

-- In the Katanga Province, Asa has a Joint Venture with Zhejiang Hailiang Company Limited to jointly explore for copper within the licensed areas. The Katanga concessions are otherwise known as SEMHKAT (Société d'Exploration Minière du Haut Katanga).

   --      The Zani-Kodo joint venture project has a JORC compliant gold mineral resource of 2.97Moz. 

-- Klipspringer diamond mine is Asa's South African interest. Asa holds a 69.77% interest in Klipspringer and although the mining operations are temporarily on care and maintenance, the tailings retreatment plant is in production. The viability of underground mining is being investigated.

Qualified Person

The information presented here that relates to Mineral Resources of the Kodo, Badolite, Zani Central and Lelumodi deposits is based on information compiled by Dr Colin Porter, who is a full time employee of Mwana Africa, has a PhD in geology, is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM), and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity they are undertaking to qualify as Competent Persons as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012)'.

(MORE TO FOLLOW) Dow Jones Newswires

November 17, 2015 02:00 ET (07:00 GMT)