Modern Mining June 2015

MINING News

Reverse circulation drilling in progress at the Mpokoto site (photo: Armadale Capital).

Armadale signs agreement on Mpokoto development

AIM-quoted Armadale Capital has signed a Heads of Terms agreement with the Africa Mining Contracting Services group (A-MCS) with a view to funding, devel- oping, constructing and operating the Mpokoto gold project in the DRC’s Katanga Province. The agreement envisages that A-MCS will introduce investors to provide at least US$20 million of loan financing with a view to funding Mpokoto into production, which is targeted for H1 2016. Paul Smith steps down as COO of Wesizwe Platinum Wesizwe Platinum Limited has announced the departure of Paul A. Smith, the compa- ny’s Chief Operating Officer, who is leaving with immediate effect to pursue other per- sonal interests. Smith joinedWesizwe in January 2013 and served the company up to 9 June 2015. He was a member of Wesizwe’s Executive Team, supporting the CEO in the ongoing develop- ment of the company’s flagship Bakubung Platinum Mine (BPM) project, located on the Western Limb of the Bushveld Complex, close to Rustenburg in NorthWest Province. 

and that the costs, both capital and opera- tional, are agreed between all parties and reflect the final terms agreed between the parties to construct and operate the mine through the mining services contract. This process will also form a crucial part of the due diligence being undertaken by A-MCS and the investors that it intends to introduce. Mpokoto has a current total mineral resource of 678 000 oz Au from 14,58 Mt at 1,45 g/t Au at a cut-off grade of 0,5 g/t. It is envisaged that the mine will produce approximately 25 000 oz per annum over a nine-year life of mine. The results of an Expanded Scoping Study demonstrated a post-tax NPV of US$55,3 million based upon a discount rate of 8 % and a gold price of US$1 250/oz. The project comprises four mining licences which are valid for an initial term of 30 years from 30 September 2014. Significant further upside is anticipated with an exploration target of 2,4 to 3,0 Mt grading 1,25-1,5 g/t Au which Armadale estimates should yield an additional 120 000-150 000 oz Au to the project. A proposed drilling programme is already planned targeting primary mineralisation and down dip mineralisation beyond the present pit limits. 

“This is a landmark agreement for our strategy of bringing Mpokoto into produc- tion within the next 12 months,”says Justin Lewis, Director of Armadale.“The provision of at least US$20 million project finance is a crucial step in the project’s development and, with extensive local experience, we are delighted to have signed with A-MCS. We will now work closely with our new partners to finalise the DFS and the defini- tive agreements to deliver a low cost, low capex mine capable of generating excel- lent returns for shareholders. With this funding and development agreement, an initial NPV of US$55,3 million (£36,3 million) based on a forecast gold price of US$1 250/oz, and a further potential resource upgrade, Mpokoto continues to show its commercial value.” The key components of the capital cost identified in the scoping study were US$8,25 million for the processing plant, US$3,75 million for associated infrastruc- ture and US$8,5 million for infrastructure. The final amount of funding will be subject to the results of the DFS. A-MCS has agreed to work with Armadale and its principal consultant, Bara Consulting, to complete the DFS on the project. This will ensure that Armadale benefits fromA-MCS’s in-country expertise

8  MODERN MINING  June 2015