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Moz gold project: first production slated for 2016

6th June 2014

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

  

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Mozambique-focused gold explorer Auroch Minerals aims to raise the $5-million required to finalise and complete the definitive feasibility studies for Stage 1 of its Manica gold project as soon as possible to remain on track for the project’s first stage of production, which is slated for 2016, says Auroch Minerals COO Jim Porter.

A key factor in securing funding is Auroch’s aim to complete the remaining scope of work for the Stage 1 definitive feasibility studies by the fourth quarter of this year. This will enable Auroch to start Stage 1 construction in 2015 and to have the gold processing plant in production in the first quarter of 2016.

Porter tells Mining Weekly that several parties from South Africa, Europe, China and Mozambique have shown keen interest in contributing to the required $5-million. He adds that, while the company is in talks with these players, it has also embarked on roadshows in Switzerland, the UK and Australia, which has generated support from potential key cornerstone investors.

Meanwhile, Mining Weekly reported in April that the company planned to use about $1.6-million raised to restructure a transaction agreement with major shareholder Pan African Resources by September 2015 which would enable Auroch to buy back shares from Pan African Resources.

Importantly, the company would allocate $1.3-million of the $5-million for further exploration and resource drilling at the gold project.

Project Overview
The Manica gold project is located on the Odzi-Mutare Manica greenstone belt, which runs through Zimbabwe into western Mozambique. It is situated 4 km north of the town of Manica, about 270 km west-north-west of the port city of Beira, in Sofala province.

The Manica licence area contains shear-hosted gold, which is contained in the major structures of the Andrada shear to the north and the Mutamburico shear to the south.

While the project spans 15 km × 5 km and is host to about 27 km of strike length, outcropping on the surface, only 5.8 km has to date been explored to reveal the 2.82-million-ounce Joint Ore Reserves Committee- (Jorc-) compliant resource.

The project currently has a total resource of 48.96-million tonnes grading at 1.79 g/t of gold. The ongoing study work has the potential to upgrade this to a head grade of 3.45 g/t. When production gets under way, the Manica project will include two openpit mines, a shallow underground mine – to be accessed through adits – and a 30 000 t/m processing plant, with supporting infrastructure and tailings disposal facilities. The project will target relatively shallow oxide and sulphide ores.

Near-Term Production
Auroch Minerals has completed 80% of the geotechnical work required for the feasibility study, 50% of the surface geotechnical work and 60% of the process design work for the plant.

It has also submitted the environmental-impact assessment report on the Manica gold project to the Mozambique Ministry of Coordination of Environmental Affairs, says Porter, adding that the company will now move into the engineering design and capital estimation phase for the standalone Stage 1 definitive feasibility study (DFS) for the project.

Stage 1 will involve construction of the Fair Bride openpit, the gold processing plant and the main infrastructure components, such as internal mine-access roads, power infrastructure, the tailings disposal facility and administration buildings, notes Porter.

Mining Weekly reported in March that Stage 1 of the project, worth $39-million, was expected to produce 172 752 oz of gold over an operating mine life of eight years, based on a resource of 3.86-million tonnes grading 2.08 g/t gold for 258 300 oz. The Stage 1 operation will also comprise a 30 000 t/m gold plant.

CEO Dean Cunningham told Mining Weekly in April that a key objective of the Stage 1 development strategy was to ensure a robust internal rate of return, a positive net present value and an environmentally and economically sustainable standalone project.

He maintains that this initial stage of the project will help the company unlock a 2.82-million-ounce resource through the future Stages 2 and 3, adding that Stage 1 will expose deeper ores found at the Fair Bride openpit.

Meanwhile, Porter outlines the various processing options, which the metallurgical testwork has indicated, and highlights the possible option of using a concentrate milling circuit for recovery of fine gold. “From this process, Auroch Minerals can obtain an 86% recovery on a –27 µm grind. In addition, by putting the flotation tailings through the standard leach circuit, we can extract another 2%, which amounts to an 88% overall recovery on the near-surface material.

“The metallurgical testwork indicates that the sulphide ore was amenable to a simple secondary milling process, further reducing the capital and operating expenses of the project,” he notes.

Porter highlights that this approach will provide access to the deeper, more significant portion of the deposit, which amounts to about 2.6-million ounces that will be mined in Stage 2.

Stage 2 of the project will consist of a 120 000 t/m openpit and possible future underground mining operation, producing more than 100 000 oz/y of gold.

Stage 3 of the project currently focuses on exploration studies on the current mining concession and will provide extensions to the mining life of the project.

Auroch Minerals plans to start the DFS for Stage 2 in 2017, while construction of this phase is expected to start in 2018 and production in 2019. “The capital required for the 20-year Stage 2 project currently amounts to about $84-million,” Porter adds.

He acknowledges the pressure on Mozam-bique-based mining projects to start producing as soon as possible to support the country’s economic growth rate –currently about 8%. However, he maintains that the company will continue its staged approach to bring the 2.6-million ounces of the Jorc-compliant resource to account and focus on remaining on schedule in terms of production for Stages 1 and 2.

“Once Stage 2 is in production, Auroch Minerals is likely to be producing more than 125 000 oz/y of gold in Mozambique, which is quite significant.

“The Manica gold project is likely to be Mozambique’s biggest gold-producing mine, unless another, more significant, deposit is discovered,” Porter concludes.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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