Name and Location
New Liberty gold project, Liberia.

Client
Aureus Mining.

Project Description
New Liberty will be Liberia’s first commercial gold mine and Aureus’s first mine in its highly prospective 1 470 km2 Liberian licence portfolio.

A definitive feasibility study (DFS) completed on the project in 2013 envisioned an openpit mining operation, extracting ore at a nominal rate of 1.1-million tonnes a year. The openpit will comprise two adjacent and interconnecting pits.
Aureus has continued to conduct further evaluation, including grade-control drilling to produce a better geological understanding of the orebody. Using this information, an optimal new mine plan has been produced.

Despite Aureus maintaining construction activities throughout the peak of the Ebola crisis in Liberia, first gold pour has been delayed from March 2015 to the end of May 2015, as a result of logistical and other difficulties beyond the company’s control.

Owing to this delay, the DFS mine plan of 2013 has failed to provide sufficient operational flexibility during the production phase and has an increased execution risk amid potential operational outages. This is primarily because the DFS mine plan is based on a single starter pit, minimising operational face lengths and not allowing for enough gold-bearing ore to accumulate on the stockpile to feed the plant in the event of a power outage.

The new mine plan compensates for the delay and improves the project’s economics. It reduces costs over the life-of-mine (LoM) and generates stronger cash flows, particularly during the ramp-up period and the first six months of production, resulting in significantly increased free cash flow after debt servicing.

The new mine plan will result in:
• stronger cash generation, particularly in the early stages of the project, which will provide more cash for exploration and working capital;
• greater operational flexibility through the creation of two starter pits, providing increased face length and stockpile management, as well as greater confidence that production targets will be met;
• increased run-of-mine (RoM) ore stockpiles, which will provide security against any unforeseen production disruption; and
• reduced mining cash costs, based on more efficient mining, using the layout of the mining infrastructure such as the waste dumps.

The new mine plan involves a revised mining sequence, now running from east to west, which uses two shallower starter pits at Kinjor and Larjor. This provides increased operational flexibility, owing to the increased workable face lengths, and allows for access to areas of high-grade ore earlier in the LoM.

A drainage berm surrounding the openpit, built from waste rock, has also been incorporated into the new mine plan. This not only shortens the haulage distance for waste rock but also lowers the project execution risk during the wet season by safely reducing water ingress into the pit, minimising the pumping required to keep the pit fully operational throughout the wet season.

The plan also incorporates increased efficiencies in the mining fleet and schedule, including ‘hot-seat changeover’ at the start and end of shifts, and temporary haulage ramps to the north of the pit to minimise waste haulage distances. This allows for more waste rock to be removed, and for ore to be mined and processed earlier in the mining schedule. The plan also has the incremental benefit of the current low fuel prices, which help to reduce the overall mining cost.

The incorporation of two starter pits, combined with increased mining and trucking efficiencies, has enabled the company to develop a more refined stockpile strategy outlined in the DFS. The increased early tonnage in the new schedule enables Aureus to create a larger stockpile of ore on the RoM pad, enabling higher ore-grade material to be blended and fed to the process plant earlier than estimated in the original schedule. This also safeguards Aureus from any potential problems in the pit by having more ore material available for processing. The stockpile-blending strategy facilitates a consistent grade of ore to be supplied to the process plant. Additional oxide material will be blended with sulphide ore during dry seasons, improving plant throughput by an estimated 15%.

The revised production profile is more appropriately aligned to the current gold price environment and the basis of the new plan is that 10% more ore material will be mined and 35% more gold will be produced in 2015, compared with the delayed DFS mine plan. These revisions more than adequately compensate for the delay in processing operations caused by the Ebola outbreak.

The New Liberty gold deposit has a total mineral reserve estimate of 923 716 oz of gold grading 3.4 g/t. It comprises 704 600 t grading 4.4 g/t in the proven mineral reserve category, and 7.79-million tonnes grading 3.3 g/t in the probable mineral reserve category.

Net Present Value/Internal Rate of Return
Pretax net present value from production, at a 5% discount rate, is estimated at $365-million in the new mine plan.

Value
The total cost associated with implementing the new mine plan, estimated at $15-million, pertains to the increased prestrip mining activities occurring over the delay period. Aureus has financed this new mine plan and its existing debt finance facilities. The remaining existing cash resources will finance the completion of the construction of New Liberty and fund general working capital.

Duration
First production is expected in 2015.

The change in the mining schedule will result in the completion of mining operations four months earlier than envisioned in the DFS, if all other material parameters are maintained.

Latest Developments
Construction on the New Liberty gold project is nearing completion and is on track to enable the delivery of first gold by the end of the month, the company has noted in a quarterly results statement.

The hot and cold commissioning phases of the project started in the quarter ended March 31, with the bulk of the work having been focused on the front-end infrastructure.

The primary jaw crusher and secondary cone-crushing circuits have been fully commissioned, while the mechanical and electrical commissioning have been completed on the screening circuit.

All conveyor systems were installed during the period, with all belts tracked, trained and running successfully.

The ball mill motor was, meanwhile, fully synchronised and direction-tested, rendering it now fully installed, with all alignments completed.

The stockpile tunnel mechanical installation has also been completed, with electrical installation reaching 60% completion.
The operation’s electrowinning circuit has also been mechanically installed and leak-tested during the period, while work continues to progress on the electrical supply installation in this area.

Overall electrical installation has reached more than 80% completion, while the oxygen plant area and gold room are well advanced. The power generation system has been fully commissioned, with all six generators on site and synchronised.

Work has also progressed on the tailings storage facility, with current work running to schedule and current storage capacity sufficient for the first 15 months of processing operations.

Aureus says mining activities have progressed well throughout the period and have focused on the weathered eastern and western ends of the Larjor pit, where mining levels have reached the 65 m relative level elevation.

Mining has also started in the weathered zone of the Kinjor starter pit, with the first flitch completed. All oxide material mined from both pits has been stockpiled on the run-of-mine pad ready for processing.

Key Contracts and Suppliers
DRA (EPCM contractors); Australian Mining Consultants (National Instrument 43-101 resource classification, and openpit and mining optimisation studies); Digby Wells Associates (environmental and social advisers); and MonuRent (mining fleet rental and maintenance partner).

On Budget and on Time?
The new mining plan and change in the mining schedule will result in processing operations starting in May 2015, with mining operations completed four months earlier than planned in the original DFS.

Contact Details for Project Information
Aureus Mining CEO and president David Reading or CFO Paul Thomson, tel +44 207 1017 690.