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
Armadale has entered into a binding heads of agreement (HoA) with African Mining Services (AMS) to form a joint venture (JV) to develop and operate the Mpokoto gold project.

Mpokoto has an established resource of 678 000 oz of gold from 14.58-million tonnes of ore at 1.45 g/t gold and is set to produce about 25 000 oz/y over a nine-year mine life.

Currently, Armadale subsidiary Kisenge is the parent of the DRC entities that own Mpokoto and will be the JV vehicle for the transaction.

Under the HoA, which will be progressed to a more detailed JV agreement between the parties on completion of the due diligence process, AMS could earn an initial 25% interest in Kisenge, through providing funding and services for Mpokoto in two earn-in phases.

Provided AMS completes its earn-in obligations, the effect of the HoA and subsequent JV is that Mpokoto will be fully funded to commercial gold production, which is targeted for late 2017.
 
As part of this refocused strategy, Armadale directors Peter Marks and Justin Lewis have decided to step down with immediate effect. 

“This is a significant agreement for the future of Mpokoto, bringing on board a very experienced mining partner with knowledge of the DRC and, crucially, access to funding,” Armadale CEO William Frewen has said.

As a consequence of forming this JV, Armadale will have no further operational or funding responsibilities in relation to Mpokoto, other than retaining at least a 15% interest in Kisenge.

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.