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Rukwa Definitive Mining Feasibility Study – Phase 1, Stage 1 Report Findings
Kibo Mining Plc (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM:KIBO
ISIN: IE00B61XQX41
("Kibo" or "the Company")
Dated: 09 December 2014
Rukwa Definitive Mining Feasibility Study - Phase 1, Stage 1 Report Findings
Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; AltX: KBO), the Tanzania focussed
mineral exploration and development company, is pleased to announce the findings from Phase 1,
Stage 1 of the Company commissioned Definitive Mining Feasibility Study (DMFS), concerning
the mining element of the Rukwa Coal to Power Project (RCPP). The Executive Summary of the
DMFS Phase 1, Stage 1 Report is available on Kibo's website at www.kibomining.com.
Key highlights
- Four alternative options identified for project development with the project financially
feasible for all of the options investigated;
- Annual estimated coal sale revenues of between US$39million and US$43million
assuming annual sales 1.6m tonnes;
- All-in Cost Margin ranges from 38% to 45%. Applying the aforementioned All - in Cost
Margin, Kibo interprets that an annual margin of between US$14.8 million to $19.4
million will be generated;
- Applying a real discount rate of 5.7% the best estimated Net Present Value ranges from
US$116million to US$141million.
Louis Coetzee, CEO of Kibo Mining, said "We are delighted to deliver this DMFS update to
investors. The report is highly significant in numerous areas but notably in respect of the All-in
Cost Margin range of 38% to 45%, which is significantly above the 25% level considered
"healthy" for this type of project.
We are also delighted with the estimated Net Present Value range of US$116million to
US$141million, which demonstrates the value of just one component of Kibo Mining's assets.
The All-in Cost Margin and Net Present Value ranges are particularly impressive given the very
prudent assumptions applied. This is evidenced by the use of coal pricing significantly below the
current market price reflecting the robust economies of this project as well as the prudent initial
DMFS assumptions. As a result, this represents a base case valuation for the project.
Furthermore, we would note that this valuation, pertaining as it does to the coal mining element of
the RCPP, is solely in respect of an input (i.e. coal supply) to power generation. The power
element is expected to be considerably more substantial in terms of operational revenues and its
proportionate significance in respect of the economic potential of the RCPP.
We expect receipt of the final Power Pre-Feasibility Study shortly and will update investors on the
report and its findings when received."
Important Notes for Readers:
The information contained within this report is taken from the DMFS Phase 1, Stage 1 report
produced by Minxcon Projects in respect of the RCPP. Recognising the level of commercial
sensitivity and for the protection of all stakeholders' interests we have limited the technical
information that we publish in this report and in the wider public domain at this time.
Readers must note that operational and financial data pertaining to any complex development
project of this nature is project specific. Kibo has undertaken the RCPP DMFS to properly and
professionally understand the technical and financial merits of the project. The findings outlined
can only be used in an assessment and analysis of the RCPP to which this work relates and not as
a generic benchmark standard.
Further information with regard to the RCPP and a copy of the Executive Summary of the DMFS
Phase 1, Stage 1 report is available on the Company's website at www.kibomining.com.
DMFS Phase 1, Stage 1 - Executive Summary Extracts and Commentary
The Definitive Mining Feasibility Study - Rukwa Coal to Power Project:
Minxcon (Pty) Ltd ("Minxcon") was commissioned by Kibo Mining Plc ("Kibo" or the "Client")
to compile a Definitive Mining Feasibility Study ("DMFS") on the Rukwa Coal to Power Project
("RCPP" or "Project"). The intended Rukwa Coal Mine is located in south-western Tanzania,
approximately 70 km northwest of the regional capital of Mbeya. This Report forms part of the
total DMFS which aims to design and plan the establishment and construction of the Rukwa Coal
Mine.
DMFS Deliverable:
The main deliverable of Phase 1, Stage 1 of the DMFS, the "Concept Study Report" is a report
providing an independent assessment on an order of magnitude level of detail. Execution of the
Concept Study forms part of an integrated project development process for the RCPP and is
informed by the independent technical report on the Rukwa Coal Resource, as well as the
information contained in the RCPP Information Memorandum ("Summary of Investment
Opportunity"). In the Concept Study Report Minxcon made important recommendations to assist
Kibo to complete the Definitive Mining Feasibility Study ("DMFS") to an appropriate level of
detail.
Financial summary:
- four alternative options identified for project development (the financial data ranges that
follow are dependent on which of the project development options is selected);
- the Project is financially feasible for all of the options investigated;
- the Project has been currently assessed over a 27 year mine life, with an average annual
coal production of 1.48million tonnes over the life of mine;
- annual coal sale revenues are estimated at US$37million to US$44million;
- the All-in Cost Margin ranges from 38% to 45% of revenue;
- All-in Cost Margin ranges from 38% to 45%. Applying the aforementioned All - in Cost
Margin, Kibo interprets that an annual margin of between US$14.8 million to $19.4
million will be generated;
- high All-in Cost Margin reflects low operating costs as a result of the proposed mining
method and shallow ore body, small sustaining capital expenditure and fixed coal price as
received from the power plant;
- the high all-in cost margin is an indication of the robustness of the Project;
- capital investment of between US$46 million and US$89 million;
- payback period for the Project is estimated at between 3.9 and 4.7 years;
- applying a real discount rate of 5.7% the best estimated Net Present Value ranges from
US$116 million to US$141 million.
Coal Mineral Resource:
Mineral Resource classification and reporting has been conducted in accordance with the
requirements of NI 43-101 by Geological Exploration Mining Evaluation Consulting Services
(Pty) Limited ("GEMECS") who has reviewed the coal properties in accordance to the terms,
definitions and guidelines provided in "A Standardized Coal Resource/Reserve Reporting System
for Canada". The estimated Coal Inferred and Indicated Mineral Resources are outlined in the
'Rukwa Mineral Resource Section' outlined underneath the 'Notes for Editors' section below.
Capital Footprint and Battery Limits:
The Capital Footprint and Battery Limits for the mine and plant includes the opencast pit, mining
and processing equipment, mining and plant buildings, all mining stockpiles, coal product
conveyor to power plant, electrical supply to and reticulation within the mine and plant area,
excess water pipeline to power plant, staff accommodation and communication systems to and
reticulation within the mine and plant area. The power plant's Battery Limits (excluded from
Minxcon's Battery Limits) include everything inside their security fence or boundary, electrical
power lines, ash storage dams as well as a water line from Lake Rukwa. The mine will be
responsible for the construction of all items that fall within its capital footprint as well as various
infrastructure leading up to the new envisioned power plant.
Mining and Processing Options:
Four different options were investigated during the mining concept study, which will be further
analysed in Phase 2 of Stage 1 of the DMFS. The differences in the 4 options are mainly
applicable to alterations in mining operating costs and mining capital costs, as well as 2 different
plant options.
* Option 1 (Contractor Mining, Crusher-Only);
* Option 2 (Contractor Mining, De-stoning Plant);
* Option 3 (Owner Operated Mining, De-stoning Plant); and
* Option 4 (Surface Miner, De-stoning Plant excl Crusher).
All these options described above were valued through Minxcon's discounted cash flow ("DCF")
model to demonstrate the viability and justifiability of extraction of coal under a defined set of
realistically-assumed modifying factors.
There exist 7 different coal seams for the Rukwa Coal Mine. It is clear that a constant coal
production over the total Life of Mine ("LoM") can be achieved.
Capital Expenditure:
All costs were sourced from actual quotations as provided by the Original Equipment
Manufacturers ("OEMs") and/or from retail companies. Where quotations could not be sourced,
historical costs and quotations were escalated to align with the current financial year and market
inflation figures. Detail about the capital is described in the relevant mining and plant reports.
It was assumed that the fleet would be replaced every five years at 70% of original fleet cost in the
capital schedule for Option 3 and Option 4.
Discounted Cash Flow Modelling:
In generating the financial model and deriving the valuations, the Free Cash Flow to Company -
DCF valuation was set up in calendar years ending December. A discount rate of 5.73% (in real
terms) was calculated for the discount factor, but the NPV was also shown for a range of discount
rates. The full intrinsic value of the operation was reported - no attributable value was calculated.
The coal prices were sourced from the client and are based on the expected price Rukwa will
receive from the power plant that would start operations in parallel with the mine. For the purpose
of the financial model the coal prices were constant throughout the LoM.
Project Key Risks:
The business of mining and mineral exploration and production by their nature contain significant
operational risks. The business depends upon, amongst other things, successful prospecting
programmes and competent management. Profitability and asset values can be affected by
unforeseen changes in operating circumstances and technical issues.
Factors such as political and industrial disruption, currency fluctuation and interest rates could
have an impact on future operations, and potential revenue streams can also be affected by these
factors. The majority of these factors are, and will be, beyond the control of any operating entity.
The Project is identified as being most sensitive to the coal price and operating costs.
Contacts
Louis Coetzee
+27 (0) 83 2606126
Kibo Mining plc
Chief Executive Officer
Andreas Lianos
+27 (0) 83 4408365
River Group
Corporate Adviser and Designated Adviser on JSE
Jon Belliss
Abigail Wayne
+44 (0) 20 3693 1470
Hume Capital Securities Plc
Broker
Oliver Morse and Trinity McIntyre
+61 8 9480 2500
RFC Ambrian Limited
Nominated Adviser on AIM
Daniel Thšle
Lucinda Alderson
+44 (0) 203 772 2500
Bell Pottinger
Investor and Media Relations
Kibo Mining - Notes to editors
Kibo Mining is listed on the AIM market in London and the AltX in Johannesburg. The
Company is focused on exploration and development of mineral projects in Tanzania, and
controls one of Tanzania's largest mineral right portfolios. Tanzania provides a secure and
stable operating environment for the mineral resource industry and Kibo Mining therein.
Kibo Mining holds a thermal coal deposit at Rukwa, which has a significant JORC compliant
defined resource (See Table 1 below), and is developing a 250-350MW mouth-of-mine thermal
power station with an established management team that includes Standard Bank as Financial
Advisor. Kibo is undertaking a Coal Mining Definitive Feasibility Study and a Power Pre-
Feasibility Study for Rukwa with initial findings to be released in the near term.
The Company also has extensive gold focused interests including Lake Victoria Goldfields and
Morogoro projects. At Lake Victoria, the Company has projects with a 550,000oz JORC
compliant gold Mineral Resource at Imweru Project (See Table 2 below) and a 168,000oz NI
43-101 compliant gold Mineral Resource at Lubando Project (See Table 3 below) in which the
Company holds a 90% attributable interest. The Company is currently undertaking a Definitive
Feasibility Study on its Imweru Project, with Preliminary Economic Assessment study findings
to be released in the near term.
Kibo also holds the Haneti Nickel Project on which the latest technical report confirms
prospectivity for nickel, PGMs, gold and strategic metals including Lithium.
Kibo Mining also holds the Pinewood (coal & uranium) project where the company has signed
a MOU to enter into a 50/50 Exploration Joint Venture with Metal Tiger PLC.
The Company's projects are located in the established and gold prolific Lake Victoria
Goldfields, the emerging goldfields of eastern Tanzania and the Mtwara Corridor in southern
Tanzania where the Government has prioritised infrastructural development attracting
significant recent investment in coal and uranium. The Company has a positive working
relationship with the Tanzanian government at local, regional and national levels and works
hard to maintain positive relationships with all communities where company interests are held.
The Company recognises the potential to enhance the quality of life and opportunity for
Tanzanian citizens through careful development of its projects.
Updates on the Company's activities are regularly posted on its website www.kibomining.com
Technical data
Rukwa Mineral Resource
Table 1 below presents a table showing the Mineral Resource estimate for the Rukwa Coal Project. The
table is taken from an NI 43 101-Compliant Report by GEMECS (Pty) Ltd dated April 2012.
Table 1
RUKWA COAL RESOURCE SUMMARY- GEMECS (Pty) Ltd
SEAM NI 43-101 IN SITU
SEAM THICKNESS CLASS MILLION TONS
S4 1.14 Indicated 2.17
S3U 2.04 Indicated 6.92
S3L 2.3 Indicated 12.63
S2 3.45 Indicated 23.43
S1U 2.48 Indicated 7.34
S1L 2.92 Indicated 17.4
S0 1.08 Indicated 1.44
Total Indicated Resources 71.34
S4 1.31 Inferred 1.38
S3U 2.24 Inferred 2.94
S3L 2.27 Inferred 3.86
S2 3.42 Inferred 7.94
S1U 2.05 Inferred 6.5
S1L 3.15 Inferred 12.83
S0 1.06 Inferred 2.6
Total Inferred Resources 38.05
TOTAL RESOURCES *109.39
*Kibo holds 100% of the Rukwa Mineral Resource
Imweru Mineral Resource
Table 2 below presents a table showing the Mineral Resource estimate for the Imweru Project at a
base case economic cut-off grade for the reporting of the resource of 0.4 g/t. The table is taken from a
JORC-Compliant Report by Tetra Tech EBA dated February 2014.
Table 2
Area Material Classification Cut-off Specific Metric Short Tons Gold Contained Gold
Type (g/t) Gravity Tonnes (t) Grade
(g/t) Ounces (troy)
Central
Laterite Indicated 0.40 2.50 131,000 144,000 1.785 8,000
Saprolite Indicated 0.40 2.50 706,000 778,000 1.387 32,000
Bedrock Indicated 0.40 2.89 1,895,000 2,089,000 1.043 64,000
Total Indicated 0.40 2.77 2,732,000 3,012,000 1.168 103,000
Laterite Inferred 0.40 2.50 685,000 755,000 1.317 29,000
Saprolite Inferred 0.40 2.50 1,047,000 1,154,000 1.040 35,000
Bedrock Inferred 0.40 2.89 7,838,000 8,640,000 1.029 259,000
Total Inferred 0.40 2.82 9,569,000 10,548,000 1.051 323,000
East Total Inferred 0.40 2.70 2,653,000 2,925,000 1.449 124,000
Imweru Property Total
Indicated 0.4 2.77 2,732,000 3,012,000 1.168 103,000
Inferred 0.4 2.79 12,222,000 13,473,000 1.137 447,000
Combined
(inf+ind) 0.4 2.79 14,954,000 16,485,000 1.143 550,000
*Kibo holds 90% of the Imweru minreal resource
* Total estimates are rounded, based on composites capped at 26 g/t gold at Imweru Central and 25 g/t at Imweru East, the cut-off grade is
based on a gold price of US$1,200 and a 90% metallurgical recovery is assumed in calculation of cut-off grade. A base case of 0.40 g/t
has been selected.
** Classification of Mineral Resources incorporates the terms and definitions from the Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC Code) published by the Joint Ore Reserve Committee (JORC)
Lubando Mineral Resource
Table 3 below presents a table showing the Mineral Resource estimate for the Lubando Project at a base
case economic cut-off grade for the reporting of the resource of 0.5 g/t Au. The table is taken from an
NI 43 101-Compliant Report by EBA Engineering Consultants Limited (now part Tetra Tech EBA)
dated August 2009.
TABLE3: LUBANDO MINERALRESOURCE SUMMARY - BASECASE*
Category West Zone East Zone South East Zone Mid East Zone North Total
Measured Resource
Measured Resource(t) 107,900 4,880 16,900 54,440 184,150
Grade(g/t) 1.6 2.52 1.72 2.48 1.95
Total Gold(oz) 5,900 400 950 4,340 11,500
Indicated Resource
Indicated Resource(t) 280,710 18,330 61,000 149,350 509,420
Grade(g/t) 1.6 2.23 1.89 2.73 1.99
Total Gold(oz) 14,500 1,300 3,700 13,120 32,600
Inferred Resource
Total Resource(t) 1,090,000 65,470 209,340 535,330 1,900,140
Grade(g/t) 1.2 1.56 3.34 3.13 2.03
Total Gold(oz) 44,550 3,300 22,500 53,900 124,200
* Kibo holds 90% of the Lubando mineral Resource
* Numbers are rounded. Composites capped at 10.85g/t gold. Cut-off grade of 0.5 g/t gold based on a gold price of US$850/oz
and assumed 100% metallurgical recovery.CIM definitions were followed for Mineral Resources.
Pursuant to the terms of an inherited agreement with Barrick East Africa Exploration LTD (BEAL), Kibo
currently has an effective 90% interest in the Imweru and Lubando Project (and thus a 90% attributable
interest in the Imweru and Lubando Mineral Resources shown in Table 2 and 3 above), with Barrick having
a 10% carried interest up to a decision to mine at which point they have to contribute or be diluted to a 2%
net smelter royalty. BEAL also has a first right of refusal pursuant to which they can buy the 90% interest
in the project at an agreed market related value after completion of a Bankable Feasibility Study. Kibo
remains the operator of the project.
Review by Qualified Persons
The information in this announcement that relates to the Rukwa Coal Mineral Resource is taken from a
report titled "Independent Technical Report for the Rukwa Coal Project, Mbeya Region, United Republic
of Tanzania" dated 19th April 2012 by CD van Niekerk Director and Principal Geologist with the firm
GEMECS (Pty) Ltd. Mr van Niekerk is a Professional Natural Scientist with the South African Council for
Natural Scientific Professions (SACNASP), Registration No. 400066/98 and a Fellow Member of the
Geological Society of South Africa. He has relevant experience and technical qualifications to be a
"Qualified Person" for reporting coal resources to the NI 43-101 Standard
Information in this announcement that relates to the Imweru Mineral Resource is taken from the report
titled "Resource Update for the Imweru Property Geita Region Northern, Tanzania, JORC Competent
Persons Report" dated February 17th 2014 (the "Report"). The Report states a JORC-compliant Mineral
Resource estimate and was prepared for Kibo Mining plc by James Barr P.Geo. and Darryn Hitchcock
P.Geo. Senior Geologist and Geologist respectively with TetraTech EBA Ltd. Both Mr. Barr and Mr.
Hitchcock are registered as Certified Professional Geologists with Association of Professional Engineers
and Geoscientists of British Columbia a recognised professional organisation. Mr Barr as principal author
responsible for the Report has experience in the evaluation and reporting of Archaean Gold projects and is
a "Qualified Person" for reporting gold resources to the JORC Standard. He consents to the inclusion in
this document of the matters based on his information in the form and context in which they appears.
The information in this announcement that relates to the Lubando Mineral Resources is taken from a report
titled "Technical Report on the Lubando property, Mwanza, Tanzania" dated 31st August 2009" (the
"Report") The Report is NI 43-101 compliant and was prepared for Great Basin Gold Rusaf Gold Limited
by Nathan Eric Fier C.P.G., P.Eng. Market Director for EBA Engineering Consultants Ltd and a Senior
Mining Consultant. Mr. Fieris registered as a Certified Professional Geologist with the American Institute
of Professional Geologists, Registration No 10062, and a professional Engineer in British Columbia,
Canada Registration No. 135165. He has extensive experience in the evaluation and reporting of Archaean
Gold projects.
The Company's Exploration Director, Noel O'Keeffe has reviewed the resource reports and the references
to them in this announcement.
Johannesburg
9 December 2014
Corporate and Designated Adviser
River Group
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