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 ramp-up 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 for 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
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
Commercial production is expected in the first half of 2016.

Latest Developments
Gold production at Aureus’s New Liberty gold mine exceeded 9 000 oz during February 2016, bringing year-to-date levels to 14 000 oz.

With the Liberia-based mine’s process plant performance now in line with original design specifications and management expectations, and gold recovery levels up to 90%, the West African gold producer officially declared commercial production, effective March 1.

Aureus CEO and president David Reading has noted that the process plant has achieved an average of 88% of design throughput capacity. During February 2016, plant throughput totalled 90 099 t of ore milled, resulting in the recovery of more than 9 000 oz of gold.

Aureus aims to continue fine tuning the process plant to further improve its overall operational performance.

Mining operations at New Liberty continue to progress, with run-of-mine stockpiles currently at 70 844 t of fresh ore at a grade of 2.59 g/t, and oxide and transitional stockpiles currently at 81 881 t at a grade of 1.32 g/t.

The company is finalising an updated mine plan for the project, while New Liberty’s mining fleet provider MonuRent has acquired five new 100-t-capacity Komatsu HD785 rigid haul trucks, with one PC1250 excavator that will be delivered and mobilised by April.

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’s 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 rather increased execution risk amid potential operational outages. This was primarily because the DFS mine plan was 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.