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LONDON, UNITED KINGDOM, Sep 5, 2011 (Marketwire via COMTEX News Network) —
Cluff Gold plc (“Cluff Gold” or the “Company”) (AIM:CLF)(TSX:CFG), the dual AIM/TSX listed West African focused gold mining company, is pleased to announce the results of an independent mineral resource estimate for the Company’s 100% owned Baomahun Gold Project (“Baomahun”) in Sierra Leone.
Highlights:
-- The indicated resources have increased to 2.1 million ounces of gold
(25.6Mt grading at 2.5g/t) representing a 46% increase over the measured
and indicated resources announced in June 2010.
-- Inferred resources now stand at 0.9 million ounces (9.6Mt grading at
2.8g/t).
-- These new resource figures will be incorporated into the definitive
feasibility study for Baomahun, which is progressing well, and is
expected to be completed during Q4 2011.
Peter Spivey, Chief Executive Officer of Cluff Gold, commented:
“We are extremely pleased with the significant increase in the mineral resources in the current resource area at Baomahun. The new resources underline the opportunity for Cluff Gold to achieve its objective of developing an open-pit gold mine at Baomahun, which has the potential to produce over 150,000 ounces of gold per annum.
Furthermore, we believe that there is significant potential to further expand the resource base at Baomahun: within the existing open pittable areas, at depth accessible by underground mining methods, and within the remainder of our mining and exploration permits. Our drilling programme will resume at the main resource area following the end of the wet season in November 2011, focusing on further opportunities that have been identified to increase our resource base through converting inferred resources to the measured and indicated categories. Exploration drilling will also resume along trend.
Work is progressing well on the definitive feasibility study, and we believe that the currently estimated mineral resources form a strong platform to justify the capital requirements for developing the mine. A number of new opportunities for cost savings have been identified and will be incorporated in the final study, which is on track for completion during Q4 2011.”
Peter Spivey, CEO, and Pete Gardner, Finance Director, will host a conference call for analysts and investors at 9:30am BST on Monday 5 September. The dial-in details are as follows: +44 (0)20 3364 5381; PIN: 6293470.
The resource estimate was undertaken by SRK Consulting (UK) Limited (“SRK”) in accordance with the requirements of National Instrument 43-101 “Standards of Disclosure for Mineral Projects”, of the Canadian Securities Administrators (“NI43-101”).
A summary of the updated mineral resource as at September 2011 compared to the resource estimate announced in June 2010 is set out in the table below:
Baomahun NI43-101 compliant mineral resources
----------------------------------------------------------------------------
As at September 2011 As at June 2010
Tonnes Grade Gold Tonnes Grade Gold
(Kt) (g/t) (Koz) (Kt) (g/t) (Koz)
----------------------------------------------------------------------------
Measured and Indicated (1) 25,610 2.5 2,070 15,096 2.9 1,420
Inferred 9,600 2.8 860 12,168 2.6 1,033
----------------------------------------------------------------------------
(1) September 2011 resources are solely in the indicated category. The
resource estimate as at June 2010 was comprised of 510Koz (5,454Kt at
2.9g/t) in the measured category and 910Koz (9,642Kt at 2.9g/t) in the
indicated category.
Details of the resource estimation parameters are set out in the appendix below.
The increase in the mineral resources at Baomahun results from the completion of 16,021 metres of drilling across a total of 53 holes, taking the total drilling at Baomahun to 96,474 metres (including geotechnical holes).
The drilling programme provided sufficient data to demonstrate greater continuity of the deposit within the existing mineralised areas. This resulted in a significant increase in the total tonnage of the mineralised zones within the indicated category. The additional tonnes are however at lower grades leading to a reduction in the overall grade of the measured and indicated resources compared to those announced in June 2010.
The updated mineral resource estimate has been classified on the basis of a different geostatistical interpolation compared to that used for the June 2010 mineral resource estimate. In addition, the mineral resource above is reported based on the definition set out by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) which states that “the cut-off grade or economic limit used to define a mineral resource must provide ‘reasonable prospects for economic extraction’.” Full details of the methodology are set out in the appendix below. As a result of the updated methodology, a more conservative approach to classification has been applied, such that the previously reported measured resources have now been included within the indicated category. This new methodology provides a robust mineral resource estimation which will form the basis of the Baomahun definitive feasibility study.
Definitive Feasibility Study
Work for the definitive feasibility study is well underway, focusing on an open-pit only mining scenario (compared to the higher risk combined open-pit and underground mining schedule set out in the Preliminary Economic Assessment, previously announced on 13 August 2010). This is expected to be completed during Q4 2011, incorporating a number of additional cost saving options recently identified by the Company.
The resource estimation and mining engineering aspects are being performed by SRK Consulting in the UK and South Africa. Metallurgical engineering, process plant design and cost estimation work is being completed by Senet Engineering of South Africa. The environmental and social impact assessment and management plans are being completed by Amec in the UK. Amec have also undertaken the work on the tailing storage facility, geotechnical engineering and hydrological and hydrogeological aspects.
As previously announced on 3 May 2011, the Company is also carrying out additional cost optimisation studies in parallel with the definitive feasibility study. Knight Piesold of Canada is completing a separate feasibility study for a run-of-river hydro-electric power facility which could provide the majority of the power requirements for the mine at significantly lower costs than heavy fuel oil (“HFO”) generation at site, as envisaged for the base case in the definitive feasibility study. This is also expected to be completed during Q4 2011.
Appendix: Resource estimation parameters:
(1) The estimates of mineral resources were calculated in accordance with
the definitions adopted by the Canadian Institute of Mining Metallurgy
and Petroleum and incorporated into National Instrument 43-101-
Standards of Disclosure for Mineral Projects ("NI43-101"). The mineral
resource estimate was carried out by Dr. John Arthur of SRK with
assistance from Andrew Owusu Asante of Cluff Gold. Dr John Arthur (CGeol
FGS, CEng MIMMM) is a Qualified Person under the guidelines set out in
NI43-101 and has reviewed this press release for accuracy and
compliance.
(2) The estimate of mineral resources may be materially affected by
environmental, permitting, legal, marketing, or other relevant issues.
For a full list of associated risk factors, please see the Risk Factors
section of the footnotes.
(3) Ounces represent estimated gold content present in the tonnes of ore
which would be mined and processed. Mill recovery rates have not been
applied in calculating the contained ounces.
(4) In accordance with the guidelines set out by the CIM and contained
within NI43-101, this mineral resource estimate for the Baomahun
property uses a 1.0g/t Au cut-off within a pit shell optimised using a
$1,500/oz Au to represent that portion of the resource which has
"reasonable prospects for economic extraction" from an open pit mining
scenario. In addition the block model below this pit shell has been
interrogated using a 1.5g/t cut-off to represent those blocks with
potential to satisfy an underground mining scenario. The resource
estimate announced in June 2010 was not constrained by an economic pit
shell and was calculated at a 1.0g/t Au cut-off for the entire resource.
(5) Cluff Gold's attributable portion of the mineral resource estimate is
100%.
(6) Tonnes and gold figures are rounded to the nearest '000. Grade is
rounded to 1 decimal point. As a result, numbers may not add up due to
rounding.
(7) The geostatstical classification methodology used by SRK in 2011 was
based on the QKNA methodology, compared to the drill density search
approach used in the 2010 resource estimate. The QKNA methodology
provides a detailed audit of the kriging parameters used for grade
interpolation and allows a sensitivity analysis to be performed to
identify the optimum search parameters to be used for the final
estimate. For the Baomahun deposit, this has provided additional
information which has resulted in a change of the classification from
measured to indicated. In the opinion of SRK this is a more appropriate
methodology for the Baomahun deposit and generates a more robust
classification with greater confidence than that generated by the
previous methodology used.
About Cluff Gold
Cluff Gold is a gold developer-producer with assets in West Africa. The Company generates significant cash flow through its Kalsaka gold mine in Burkina Faso. The Company remains focused on its objective of becoming a mid-tier producer through the development of its wholly-owned Baomahun project in Sierra Leone, which is expected to contribute an additional 157,000oz of gold per annum, with significant exploration potential along strike. With its experience of bringing new mines into production and a project pipeline of exploration licenses in Burkina Faso and Mali, the Company aims to further increase its production profile with its highly prospective exploration work across all assets.
Baomahun is Cluff Gold’s defining development gold project in Sierra Leone. Definitive feasibility study work is progressing in the immediate resource area, where 2.1Moz of measured and indicated resources 25.6Mt at 2.5g/t) and a further 0.9Moz of inferred resources (comprising 9.6Mt at 2.8g/t) have been delineated to date. The current resource base is limited to only 1.5km of a total 12km strike length which remains largely unexplored to date.
The Company is employing a two-fold strategy for Baomahun: to advance towards production with the current resources while delineating additional ounces along strike.
This press release includes certain “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, the positioning of the Company for future success, statements regarding potential future production at Baomahun, the expansion of the resource base within existing pittable areas or by underground mining methods, the potential generation of hydro-electric power at Baomahun, the timing of the feasibility study and exploration and future drilling results at Baomahun, and future capital plans and objectives of Cluff Gold, are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cluff Gold’s expectations include, among others, risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined as well as future price of gold. Although Cluff Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cluff Gold does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.
Dr John Arthur, (CGeol FGS, CEng MIMMM), of SRK Consulting (UK) Limited and a “qualified person” as such term is defined in National Instrument 43-101, has reviewed the contents of this press release. Dr Arthur has verified the data disclosed in this release and is independent of the Company.
Risk Factors:
Baomahun does not have identified Proven and Probable Mineral Reserves, which will be required as a basis for determining if Baomahun has bodies of commercial mineralisation. The costs, timing and complexities of upgrading the Mineral Resources at Baomahun to Proven and Probable Mineral Reserves could have a material adverse effect upon the Company and would materially and adversely affect our potential mineral production, profitability, financial performance and results of operations. Significant time and financial requirements are needed for bringing Baomahun into production and there can be no assurance that we will be able to accomplish this by 2013/2014, or at all.
Mineral exploration and development involves a high degree of risk and few properties which are explored are ultimately developed into producing mines. With respect to Baomahun, substantial expenditures will be made by Cluff Gold to confirm Mineral Reserves which are sufficient to commercially mine such property, and to conclude appropriate fiscal stability agreements required to commence commercial operations. There can be no assurance that the Mineral Resources at Baomahun can be commercially mined or that the metallurgical processing will produce economically viable, saleable products. The decision as to whether a property contains a commercial mineral deposit and should be brought into production depends upon the results of exploration programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which involves significant expense. This decision will involve consideration and evaluation of several significant factors including, but not limited to: (1) costs of bringing Baomahun into production, including exploration and development work, preparation of feasibility studies and construction of production facilities; (2) availability and costs of financing; (3) ongoing costs of production; (4) market prices for the minerals to be produced; (5) environmental compliance regulations and restraints; and (6) political climate and/or governmental regulation and control. With respect to Baomahun we are currently preparing our new mine plan and economic analysis of the proposed operations. Until such is done, there can be no assurance that our proposed operations at Baomahun will be profitable. Our ability to sell, and profit from the sale of any eventual mineral production from any of our properties will be subject to the prevailing conditions in the minerals marketplace at the time of sale. The global minerals marketplace is subject to global market conditions and changing attitudes of investors, consumers and other end-users’ demand for gold. Many of these factors are beyond our control and therefore represent a market risk which could impact the long term viability of Cluff Gold and its operations.
SOURCE: Cluff Gold PLC
Cluff Gold plc J.G. Cluff Chairman +44 (0) 20 7340 9790 Cluff Gold plc Peter Spivey Chief Executive +44 (0) 20 7340 9790 Cluff Gold plc Pete Gardner Finance Director +44 (0) 20 7340 9790 Evolution Securities Limited Tim Redfern +44 (0) 20 7071 4300 Evolution Securities Limited Jeremy Ellis +44 (0) 20 7071 4300 Pelham Bell Pottinger Lorna Spears Investor Relations (Global) +44 (0) 20 7861 3232883 Pelham Bell Pottinger Philippe Polman Investor Relations (Global) +44 (0) 20 7861 3232883 Farm Street Communications Ltd Simon Robinson Press Relations (U.K.) +44 (0) 7593 340 107 [email protected]
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