7th Apr 2014 09:14
LONDON (Alliance News) - Armadale Capital PLC Monday said strong financial returns have been demonstrated from its scoping study at the Mpokoto Gold Project in the Democratic Republic of Congo, giving the site a net present value of USD33.0 million.
The AIM-quoted investment company, focused on natural resource projects in Africa, said the site's post-tax net present value was based on a discount rate of 8%, a gold price of USD1,250 per ounce and internal rate of return of 141%.
Armadale said the scoping study focused on the shallow oxide ore body on the site but showed further upside potential from its unweathered ore region where a stage 2 Scoping Study is to start shortly.
The scoping study showed an average annual production of 24,600 ounces over an initial life of mine of five years, with an average operating cash cost of USD649 per ounce and total capital cost of USD20.2 million.
The company said the site demonstrates a robust low cost gold development project with attractive economic fundamentals even at a low gold price of USD1,100 per ounce. Spot gold is currently quoted at USD1,298.73 per ounce.
Armadale also noted that it sees significant exploration upside through the extension of the sites existing ore zones to increase its current 506,700 ounces of gold mineral resource.
The news comes a week after the company noted that its total inferred and indicated resources for Mpokoto are lower after detailed re-logging and re-interpretation of the weathered rock profile at the site gave an updated JORC-compliant mineral resource estimate.
Armadale said at the time that its total inferred and indicated resources fell slightly to 506,700 ounces of gold, from 510,200 ounces, and that its total fresh mineral resource fell 27% to 299,000 ounces from 409,200 ounces when compared to studies in December 2013.
However, the company said that its oxide mineral resource had increased fivefold to 109,500 ounces of gold from 20,500 ounces, and it increased the tonnage of its transition ore zone on site by 23% to 2.45 million tonnes from 1.99 million tonnes.
Armadale Capital shares were down 9.0% to 0.133 pence in early trading Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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