Name of the Project
Mpokoto gold project.

Location
Katanga province, Democratic Republic of Congo.

Client
Armadale Capital.

Project Description
A prefeasibility study completed on the proposed first phase of the Mpokoto project has shown robust fundamentals.

The study is based on the intended initial phase of mining at the project that will focus on the shallower oxide portion of the resource, which will be prioritised for exploitation in conjunction with the continued development of the deeper unweathered ore designated for Phase 2.

Mining is planned using standard openpit methods, owing to the differing metallurgical process recovery of the different types of material sequencing. Mining will focus on oxide material first, followed by transition ore. This approach is supported by the different material types that are situated sequentially on top of each other, with oxide material at surface followed by transition and fresh material.

The oxide ores planned to be mined initially are situated in the deeply weathered zone. The rock in this zone is weak and friable; it has been assumed that the material will be free dig, down to depths of about 30 m to 40 m. Waste and ore will be loaded using a hydraulic shovel tipping into 40 t articulated dump trucks for hauling to the plant or waste dumps. Waste dumps will be adjacent to the pits. Below the weathered zone, drill-and-blast will be employed on transition material prior to loading and hauling. Mining costs will, therefore, differ for each material type.

Five discrete pits have been identified along the strike of the orebody, with a maximum depth of mining 60 m below surface in the main Pit A.

The mine is planned to produce at 60 000 t/m, with 73% of production being mined from the main pit. A total of 3.02-million tonnes will be mined at a strip ratio of 2.43 t of waste to 1 t of ore. Run-of-mine grade is estimated at 1.40 g/t, with 136 210 oz of gold delivered to the mill.

The Phase 1 processing plant will be built to process predominantly oxide ores.

Openpit mining for the first phase is expected to produce an average 24 900 oz/y of gold over a 4.4-year mine life.

Phase 2 will cover the mining and processing of sulphide ore.

The ore that will be delivered to the plant initially will be amenable to gravity methods of gold recovery. The process will comprise scrubbing, crushing and milling, followed by gravity concentration prior to the carbon-in-leach, elution and electrowinning of gold. The estimated metallurgical recovery for this plant is 84%. The proposed plant has been expanded from what was proposed in the scoping study, as a result of the additional metallurgical work undertaken. Subsequently, another crusher was added.

Jobs to be Created
Not stated.

Net Present Value/Internal Rate of Return
The results of an expanded scoping study have estimated a post-tax net present value, at an 8% discount rate, of $55.3-million and a gold price of $1 250/oz.

Value
The first phase of the project is estimated at $25.15-million.

Duration
The project was initially planned to start in the first half of 2016, but will now start only in the second half of the year.

Latest Developments
Kisenge Mining (KMP) has completed due diligence and exercised its option to form a joint venture (JV) over Armadale’s Mpokoto project.

Mpokoto has a total mineral resource of 678 000 oz gold from 14.58-million tonnes, at 1.45 g/t.

Under the terms of the JV agreement, KMP could earn an initial 25% interest in Armadale’s subsidiary, Kisenge, by providing funding and project-related services of up to $1.25-million, including incremental metallurgical testwork, and refining the current definitive feasibility study (DFS) to incorporate financing for the project and initial capital works.

Upon completion of the first phase, KMP has 30 days to decide whether to exercise an option to proceed with a second phase.

If so, it will seek to arrange funding to put Mpokoto into production and if it successfully arranges 100% of the funding, it will receive a further 60% in Kisenge, lifting its aggregate interest to 85%.

“With attractive economics and a defined route to production, we are confident that the project offers significant potential and we are pleased that the completion of KMP’s due diligence has led to the commencement of phase one of the JV agreement.

“KMP will assume operational responsibility and provide funding to further advance Mpokoto. The board is optimistic that once KMP has completed the revised DFS and other work, it will progress to the second phase of the JV agreement to bring Mpokoto into commercial production,” Armadale chairperson William Frewen has said.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The start of production has been delayed, owing to financial constraints.

Contact Details for Project Information
Armadale Capital investor relations, Charles Zorab, tel +44 207 233 1462.