Wrap Text
Shareholder Operational Update: Final Quarter 2014
Kibo Mining Plc
(Incorporated in Ireland)
Registration Number: 451931
(External registration number: 2011/007371/10)
Share code on the JSE: KBO
Share code on the AIM: KIBO
ISIN: IE00B61XQX41
("Kibo" or the "Company")
30 December 2014
Shareholder Operational Update: Final Quarter 2014
Kibo Mining plc ("Kibo" or the "Company") (AIM: KIBO; JSE AltX: KBO) the Tanzania
focused mineral exploration and development company, is pleased to provide Shareholders
with a summary of company operational activities during the final quarter of 2014.
QUARTER HIGHLIGHTS AND CEO COMMENTS:
* Completion of Concept Study Report (Stage 1, Phase 1 of the Definitive Mining
Feasibility Study) for the Rukwa Mineral Resource;
* Completion of Power Pre-Feasibility Report for the Rukwa power plant;
* Completion of Preliminary Economic Assessment for the Imweru Gold Project; and
* Signing of Memorandum of Understanding for 50/50 joint venture on the Pinewood
Uranium Project with Metal Tiger Plc ("Metal Tiger").
Louis Coetzee, C.E.O. of Kibo commented:
"We are delighted to report extensive business progress during the final quarter of 2014, a
quarter where we have started to demonstrate to the market the value of the projects
within the Company's portfolio, as supported by independent Competent Persons' Reports.
For our Rukwa Coal to Power project (RCPP) we have seen professional reports delivered
on both our coal mining and power generation components. The study work undertaken to
date has provided attractive indicative valuations, based on conservative assumptions, for
both the mine and power generation projects. We believe that, with continuing technical
progress, the indicative valuation of the projects should increase considerably as the
feasibility work continues. Discussions with numerous potential partners are underway
and we look forward to updating the market with further details when they become
available. Kibo's management team are seeking to deliver the very best outcome for the
Company and shareholders by securing the best available terms and selecting the strongest
possible partners for the RCPP.
Whilst the RCPP has been the primary focus of the Company this year, we should not lose
sight of the breadth and depth of the Kibo business and its assets. We have received the
Preliminary Economic Assessment for our Imweru Gold Project, and we are spending time
to review this positive report, before reporting in detail to shareholders. This has taken a
little longer due to the work being undertaken on the RCPP given the magnitude of
developments in that regard.
At the same time our highly prospective nickel, gold, PGMs, lithium and tantalum/niobium
asset at Haneti is being progressed with important geochemical interpretation work
underway and nearing completion. Discussions with regard to potential new project
partners are also ongoing. Further progress has been achieved at our Pinewood Uranium
Project through our proposed Joint Venture with Metal Tiger plc whilst making progress in
the search for a partner for the Morogoro Gold Project, where we have highly prospective
gold licences.
At the close of 2014 we have a considerable business, diversified by commodity and stage of
exploration or development cycle. We have demonstrable value for our assets supported
through independent CPRs and substantial partner interest across our portfolio. It has
been a good year but the Company believes there are far greater value generation
possibilities ahead and we as a team are highly enthused to continue our work, with
regular and material news flow from the start of 2015."
KIBO MINING PLC COMPANY PROJECT OVERVIEW
Kibo Mining has five distinct operational assets under development at this time, all situated
within Tanzania:
1.Rukwa Coal to Power project seeking to mine a 109Mt NI 43-101 compliant thermal
coal resource, utilising this coal for a mine mouth 250MW to 300MW thermal power
station. This project is in the development stage with Feasibility work ongoing.
Various reports have been released on this project in the last quarter, as detailed
below. The project has the support of the local, regional and national Tanzanian
government as well as the local community, and is a key component of the Tanzanian
National Strategic Energy Plan which is looking to resolve the shortage of power in
the country and notably, the region where the project is located. The Company is in
very advanced discussions with a range of prospective project partners with whom the
Company intends to move the project forward as rapidly as possible toward the
construction phase.
2.Lake Victoria Goldfields project where the Company has projects with a 550,000oz
JORC compliant gold Mineral Resource at the Imweru Project and a 168,000oz NI
43-101 compliant gold Mineral Resource at the Lubando Project. Currently the
principle focus of the Company is on developing the Imweru Gold project into a
producing asset after recently receiving the Preliminary Economic Assessment report
for this project. There are various value generative options available for the Imweru
Project, assuming the project is not sold beforehand. Forecast production from
Imweru is expected to deliver sufficient free cash flow to support the majority of non-
RCPP business expenditure (working capital and non-RCPP exploration/development
work).
3.Haneti project where significant ground exploration operations have been completed in
recent years with results being collated and a geochemical interpretation exercise
nearing completion. Haneti is prospective for multiple minerals including nickel
sulphides, PGMs, gold, lithium and tantalum/niobium. The project has drill ready
nickel targets and is the subject of discussions with potential partners with whom the
Company would look to advance project development.
4.Pinewood Uranium project with a range of licences highly prospective for uranium
and situated in a known uranium development district where nearby projects have
been subject to significant corporate transactions in recent years. This project is now
in due diligence and is subject to a proposed Joint Venture arrangement with Metal
Tiger plc (LON:MTR), an AIM listed company, with whom it is proposed to
undertake a 50/50 Joint Venture, further details of which are provided below but the
intention of which is to enable the company to see progress achieved without bearing
the medium term costs of licence retention or operational exploration.
5.Morogoro Gold project where the Company holds highly prospective gold licences
which share the same system as Canaco's million ounce Magambezi gold discovery.
The Company is currently in discussions to Joint Venture this project with an external
partner, enabling the project to be moved forward but again without the Company
bearing the costs of licence retention or operational exploration.
Within the last quarter of 2014 progress has been made across all areas of the business, but
notably in respect of the Technical Reports received for the Rukwa Coal to Power Project
and the Imweru Gold Project. During the quarter we also signed a Memorandum of
Understanding with Metal Tiger plc in respect of a Joint Venture over the Pinewood Uranium
project. Further detailed notes on these key quarter developments are provided below.
PROJECT BASED TECHNICAL REPORTS
This section provides a summary of the results of the major technical & financial reports
pertaining to the commencement of Feasibility Studies at the RCPP and Imweru projects
which were completed on schedule by independent consultants for the Company during the
fourth quarter.
These results have already been announced in a series of RNS/SENS releases over the
quarter.
1. Rukwa Coal to Power Project
Mining Component
* Completion of Concept Study Report (Stage 1, Phase 1 of the Definitive
Mining Feasibility Study) for the Rukwa Mineral Resource by Minxcon
(Pty) Ltd. Report findings were announced on 9 December 2014, with
highlights including :
* Four alternative options identified for project development with the project
financially feasible for all four alternative options evaluated;
* Capital Investment of between US$46 million and US$89 million;
* Annual coal sale revenues estimated between US$37 million and US$44
million depending on the selected option;
* All-in in Cost Margin estimates of 38% to 45% (equates to an indicative
annual margin of US$14.8 million to $19.4 million);
* NPV of US$116 million to US$141 million at 5.7% discount rate with
payback period 3.9 to 4.7 years.
Thermal Power Station Component
* Completion of Power Pre-Feasibility Report by Aurecon. Report findings
were announced on 18 December 2014, with highlights including:
* Four thermal plant configurations were assessed with recommendation for 2 X
150 megawatt Circulating Fluidised Bed option to be evaluated at Feasibility
Study stage;
* Total capital cost estimated at between US$640 million to US$760 million
depending on plant configuration;
* Indicative annual power generated (dependent on plant option selected)
between 1,841 gigawatt hours per annum and 1,877 gigawatt hours per annum;
* High level environmental risk analyses identified no major obstacles to
development;
* Additional Rukwa Mineral Resource sufficiently large enough to potentially
double the current design size to 300 megawatts or to be used in alternate
energy conversion technologies..
* Completion of preliminary base case financial model for RCPP by the
Company as announced on 18 December 2014 with highlights including:
* Estimated indicative Life of Plant revenues of approximately US$7.8 billion to
US$8.4 billion;
* Indicative project NPV of between US$230 million and US280 million (at a
15% discount rate);
* Indicative pre-tax equity IRR > 23%; and
* Indicative post-tax payback of 8 to 9 years.
In addition to the RCPP reports summarised below, agreement has also been reached
during the quarter in negotiations by the Company with relevant Tanzanian Government
Departments and Utilities on the framework and terms of reference under which a Power
Purchase Agreement, Grid Connection Agreement and Coal Sale Agreement will be
concluded. These Agreements will be critical inputs to the final integrated Feasibility
Study for the RCPP.
2. Imweru Gold Project
* Completion of Preliminary Economic Assessment ("PEA") by Minxcon (Pty)
Ltd (as announced 16 December 2014) with detailed report findings now under
review and a report to shareholders to be provided in the near term. The
Company has confirmed at this time that the PEA report does support that the
project is capable of significant free cash flow generation and has reaffirmed
earlier Company findings with regard to:
* Sufficient gold Mineral Resource (550,000 oz.) to support early production;
* High degree of confidence in potential to add to the Mineral Resource and
extend the mine life;
* Metallurgy of ore appears amenable to standard processing and treatment;
* Substantial gold mining infrastructure present in region from existing
operating gold mines;
* Detailed report review underway with results due to be reported to market as
soon as possible.
Preliminary base case internal modelling figures for initial input to Definitive
Feasibility Study (Not to be interpreted as financial forecasts)
MOU - PINEWOOD URANIUM PROJECT
As announced on 21 November 2014 the Company signed an MOU covering its Pinewood
Uranium project. This MOU enables the Company to see progress achieved at a prospective
uranium asset, with medium term licence retention and exploration costs assumed by the
Joint Venture partner. The key terms of this transaction are outlined below.
* Binding MOU on terms for 50/50 joint venture with Metal Tiger Plc:
* £150,000 equity investment by Metal Tiger on signing MOU;
* Warrants over 10,000,000 new ordinary shares in Kibo exercisable at 3p per
share with a 3 year term to be granted to Metal Tiger on signing of the joint
venture;
* Metal Tiger to meet tenement maintenance costs in first 12 months of JV (c.
£100,000);
* Metal Tiger have the option to expend the first US$800,000 on exploration
within 3 years which includes tenement maintenance costs (renewal licence
fees and other tenement related expenses) to maintain a 50% interest in the
Pinewood JV;
* Provision for the Pinewood Project to revert 100% to Kibo should Metal Tiger
not meet the first 12 month tenement maintenance costs, withdraw from the JV
or not meet its expenditure obligations to an amount of greater than or equal to
US$300,000;
* Metal Tiger's 50% interest will revert to a 10% free carry interest in the JV
should it expend greater than or equal to US$300,000 but less than
US$800,000.
ONGOING OPERATIONS SUMMARY
The Company remains active across all areas of the business and this level of activity will
continue during the early part of 2015 and beyond.
With regard to the RCPP we are currently producing an integrated Coal Mining and Power
Generation report, which is the next stage of the technical reporting process. When this is
complete we will update the market with a detailed report early in the New Year. The
Company is also seeking to finalise partnership negotiations with regard to future
development of the RCPP. As previously stated there are intensive discussions and
negotiations underway which we will conclude at the earliest possible opportunity. As work
progresses we also anticipate regular technical RCPP progress announcements covering a
range of areas in respect of both the coal mining and power generation components.
For Imweru we will be finalising our review of the Preliminary Economic Assessment report
and be reporting to market various operational and financial data from the report in the near
future. We are also seeking to confirm the strategic direction for Imweru and are in
discussions with various parties in this regard. This could lead to a sale of the asset or a
decision to move the asset down the development pathway toward the cash generative
production phase. We will update shareholders in this regard, as soon as possible.
At Haneti we are finalising our geo-chemical interpretation and will release our technical
findings when these have been concluded. We consider Haneti to be a considerable asset to
the Company and indeed were it not for the value and opportunity of the RCPP and Imweru,
Haneti could be the flagship project. We are drill ready at key nickel targets and have various
other exciting opportunities we would like to pursue. The level of prospectivity is such that
the project has attracted various interested parties with whom we are in discussions and we
will update shareholders accordingly, should we pursue any specific option.
At Pinewood, and subject to due diligence, we anticipate finalising the proposed Joint
Venture with Metal Tiger plc and both companies will announce progress to market at the
appropriate time. We recognise Pinewood to be a significantly prospective asset and look
forward to operational news flow in due course.
Finally we are continuing to pursue discussions over our Morogoro project and the highly
prospective gold licences therein. We will update the market as and when these discussions
progress to satisfactory conclusion.
Overall we anticipate a very substantial flow of news to market in the early part of 2015. The
momentum created in the latter half of 2014 will therefore be continued and the Board,
Management and the entire team at Kibo look forward to 2015 with renewed energy and
commitment.
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 mineral 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 MINERAL RESOURCE 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
30 December 2014
Corporate and Designated Adviser
River Group
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