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.

The 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 costs.

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. 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 figures of 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 having occurred during 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
Aureus Mining has announced the start of gold sales and initial mining and processing operations from its New Liberty gold mine after achieving nameplate capacity at the gold plant in mid-July.

The company has disclosed in an operational update that the operation is on track to declare commercial production in the fourth quarter of the year, once the mill has operated at an average of 60% or more of the designed production capacity calculated over a 60-day period.

The mine’s processing plant has, to date, processed 52 310 t of run-of-mine ore at an average feed grade of 3.6 g/t and at an average gold recovery of 89%.

Mining operations had initially been hampered, owing to the limited availability of explosives, but this has since been addressed.

During the plant commissioning phase, the company sent four gold doré shipments for smelting and refining in Switzerland, resulting in sales of 4 881 oz of gold at an average price of $1 119/oz.

Plant processing operations are focusing on optimising reagent consumption, grind size and gold recoveries, while the miner is preparing to implement an updated mine plan, which includes the earlier deployment of additional mining equipment.

New Liberty is expected to have an eight-year life and produce 119 000 oz/y for the first six years.

Key Contracts and Suppliers
DRA (engineering, procurement and construction management 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?
Despite Aureus maintaining construction activities throughout the peak of the Ebola crisis, in Liberia, first gold pour was 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 failed to provide sufficient operational flexibility during the production phase, and 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 during a power outage.

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