JOHANNESBURG (miningweekly.com) – The conclusion of a drilling programme at the Mpokoto gold project, in the Katanga province of the Democratic Republic of Congo (DRC), is expected to lead to an upgrade in the project’s resource to 678 000 oz of gold, Aim-listed miner Armadale said on Wednesday.

This would represent a 78% increase from the estimated 380 000 oz resource when the project was acquired by Armadale in November 2013.

“When we acquired Mpokoto 14 months ago, we set out an ambitious development schedule targeting commercial production in the near term to translate the mineralised potential of Mpokoto into tangible shareholder value.

“This has resulted in the completion of a number of major value enhancing milestones which have defined the project as a robust gold development project with attractive economic fundamentals and a net present value of $55.3-million, based upon a discount rate of 8% and a gold price of $1 250/oz,” Armadale director Justin Lewis said in a statement to shareholders.

The company has increased the project’s Joint Ore Reserves Committee-compliant resource through targeted drill work three times. “We remain focused on continuing our drilling efforts when the wet season has finished, to upgrade this further and look forward to updating shareholders on these developments in the first quarter,” Lewis noted.

Commercial production at Mpokoto was expected to start in the first half of 2016, with project construction to start in the second half of this year, subject to project financing. The company believed that it was well financed for this phase.

Discussions with a number of groups, concerning certain aspects of the project development including earthmoving contractors, equipment suppliers, as well as other service providers within Southern Africa and the DRC, were also in the works.  The group had also started sourcing the requisite human resources to develop the project.

Further, the company was granted four mining licences in November – valid for an initial term of 30 years from September 30, 2014. 

“With a defined pathway to production secured, I am delighted with the progress we have achieved at Mpokoto.  I believe that 2015 will be a year of immense opportunity for the company as we continue to unlock the project’s inherent value; key milestones to look out for this year include the completion of our definitive feasibility study and the start of project construction,” Lewis concluded.