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Alecto Minerals plc / EPIC: ALO / Market: AIM / Sector: Exploration & Development 16 December 2015
Alecto Minerals plc ('Alecto' or the 'Company')
Contract awarded to finalise project design, source vendor financing and provide EPC management for Matala Gold Mine, Zambia
Alecto Minerals plc (AIM: ALO), the Africa-focused gold and base metal exploration and development Company, is pleased to announce that, following the Company's recent exciting acquisition of the historic Matala and Dunrobin gold mines in Zambia and as part of the Board's determination to move quickly towards becoming a gold producer, Alecto has entered into an agreement with PenMin Ltd ('PenMin'), a South African based consultancy group which has extensive knowledge of Matala and Dunrobin, to assist in delivering the next stage of Alecto's Matala Gold project ('Matala' or the 'Project').
Pursuant to the agreement, PenMin will, inter alia, assist the Company in:
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Updating and finalising the historic Definitive Feasibility Study ('DFS') prepared by Coffey Mining and a works programme for Matala, in order to secure the two main contracts required to bring Matala into future production; namely the mining contract and the contract for the supply and operation of the plant;
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Preparing the Design Build and Operate (DBO) contract (to FIDIC Gold Book standards) for the Project. This will exclude the mining elements of the Project, but will include the supply of process plant and mining infrastructure components such as workshops, wellfield, earthworks and roads etc;
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Preparing the mining contract to secure a mining contractor. Engagement of a mining contractor, who will finance the cost of supplying and operating the mine fleet, will serve to reduce the initial capital required to commence mining operations at Matala;
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Seeking to secure vendor financing for the supply of the processing plant, a major capex requirement for bringing the Project in to production;
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Ensuring that all the relevant permits and approvals are in place to commence production, which will include securing the relevant insurance for the Project; and
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Management of the master schedule for Matala.
Subject to successfully completing the above workstreams and on the commencement of operations, PenMin will then adopt a client representative project management role, which will include oversight of all aspects of the Project except for the Company's responsibilities of geology/resource management and mine planning, government interaction, environmental and social management, security management and financial controls.
Mark Jones, CEO of Alecto, commented:
"Following the completion of the acquisition of Matala and Dunrobin, Alecto has got off to a flying start in preparing the Project. In partnership with PenMin and our largest shareholder, who via Digmin Group Pty Ltd provides experienced mining and infrastructure build contracting services, we have developed a clear roadmap
of how we can rapidly move the Matala Project into production. Utilising the skills of our partners and leveraging the in-house experience of Alecto's Board and personnel, we have a clear opportunity to deliver ahead of our initial expectations.
"We will continue to pursue our plans across the rest of Alecto's portfolio, in particular the advancement of our strategy to deliver production from our 100% owned Kossanto East Gold Project in Mali through co-operation with Desert Gold. Accordingly, we hope to be able to deliver production from two projects in the near to mid- term.
"This is an exciting time for Alecto and I truly hope that the value potential that can be created, even in these difficult times, will begin to be recognised by the market."
Information on Matala and Dunrobin
The Matala and Dunrobin gold mines are located in a licence area of south-central Zambia dominated by the Mwembeshi Shear Zone, which incorporates the geologically complex Matala Dome, an elongated east- northeast Dome parallel, or sub-parallel, to the trend of the shear. The single 32km2 25 year renewable mining licence (licence 8074-HQ-LML) was granted by the Ministry of Mines in Zambia in 2003 and reinstated in December 2014 (the 'Licence').
Figure 1: Licence area showing the Matala and Dunrobin historic mines and satellite deposits
Gold mineralisation has been identified at multiple locations across the Matala Dome, and specifically within the Licence. At Matala, gold mineralisation is characterised by strong stratigraphic deformation, shearing and the
presence of quartz-dolomite-pyrite-tourmaline-albite-sericite alteration and vein stockworks. The mineralised assemblages occur in steep south-dipping stockwork.
The Matala deposit contains an estimated 568,000 oz Au JORC Code compliant resource in the Indicated and Inferred categories and was subject to limited historical underground mining during the pre-independence years in Zambia.
Alecto has identified, subject to further funding, the potential to develop a low-cost, profitable, small-scale 400,000 tonnes per annum open-pit mine at Matala and satellite deposits, targeting the oxide and transitional ore and using a simple crushing, milling and gravity circuit with subsequent direct cyanidation.
Alecto has completed an internal scoping study for Matala, based on the historic work undertaken by Coffey Mining, and estimates that Matala has attractive economics. At an estimated initial capital cost of approximately US$18 million, a gold price of US$1,150/oz and a discount rate of 10%, Matala would have an NPV of approximately US$18 million and an indicative IRR of approximately 65% over the initial three-year life of mine. With the excellent gold grades in the oxides at Matala, which are expected to average 3.1g/t Au over the first two years, the initial phase will have an estimated C1 cash cost of approximately US$695/oz, excluding government royalties of 6%.
**ENDS**
For further information, please visit www.alectominerals.com or contact:
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Alecto Minerals plc
Mark Jones
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Tel: +44 (0)20 3137 8862
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Strand Hanson Limited Richard Tulloch Matthew Chandler James Dance
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Tel: +44 (0)20 7409 3494
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Beaufort Securities Limited
Jon Belliss
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Tel: +44 (0)20 7382 8300
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St Brides Partners Limited
Elisabeth Cowell Felicity Winkles
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Tel: +44 (0)20 7236 1177
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Notes to editors:
Alecto Minerals plc is an African focussed, gold and base metal exploration and development company quoted on AIM with gold exploration projects in Zambia, Mali, Burkina Faso and Mauritania.
In Zambia, the Matala and Dunrobin gold mines have, in aggregate, a 760,000 oz Au JORC Code compliant resource estimate in the Measured, Indicated and Inferred categories at an average grade of 2.3g/t Au. The Company is focused on seeking to bring Matala into low-cost production in the near to mid-term
In Mali, the Kossanto Project has a current independent inferred JORC Code compliant resource estimate of 6.72Mt grading at 1.14g/t Au for an aggregate of 247,000 oz Au with a cut-off grade of 0.5g/t Au at Kossanto East. The Kossanto Project is located in the centre of the Kenieba inlier in western Mali. The Kenieba inlier is a block of ancient greenstones and granites hosting many significant gold deposits in Senegal and Mali, making it one of the most important gold regions in Africa.
Alecto also owns the Kerboulé Project, located in the highly prospective Birrimian-age Djibo gold belt in northern Burkina Faso, as well as the wholly owned Wad Amour IOCG Project in Mauritania which is at an exploration stage.
Accordingly, the Company has a strong, diversified project portfolio with exciting exploration upside potential.