PEA and Exploration Update for the Sega Project

16 October 2012 AIM:AMA / TSX:AMZ

Amara Mining plc

("Amara" or "the Company")

RESULTS OF PRELIMINARY ECONOMIC ASSESSMENT AND EXPLORATION UPDATE FOR THE SEGA GOLD PROJECT

Amara (formerly Cluff Gold plc), the dual AIM and TSX-listed West African focused gold mining company, announces the results of the Preliminary Economic Assessment ("PEA") and an exploration update for its Sega Gold Project ("Sega") in Burkina Faso. A technical report supporting the results of the PEA will be filed on SEDAR within 45 days.

The PEA has confirmed the potential viability of mining oxide and transitional material at Sega, located 20km north of Kalsaka, and transporting it to Amara's existing heap leach operation at the Kalsaka Gold Mine ("Kalsaka") for processing. Maintaining cash flow is a key priority for the Company and, with Sega's resources located 20km north of Kalsaka, production is expected to continue in Burkina Faso to help fund Amara's development pipeline (Baomahun and Yaoure) and ensure that the Company maintains its status as a gold producer.

Highlights of the PEA:

·; An internal rate of return ("IRR") of 48%, with a post-tax net present value ("NPV") of US$49.5 million using a gold price of US$1,500 per ounce and a discount rate of 10%

·; Contained gold of 162,825 ounces over the 21 month initial mine life

·; Cash cost per ounce produced excluding royalties of US$821 per ounce

·; Mining licence expected to be received in Q1 2013 and mining at Sega anticipated to commence in H1 2013

Highlights of the exploration programme:

·; Drill results to date confirm potential for substantial upside to current Sega resources

·; Significant intercepts at the Touli prospect on the Sega licence area include:

o 26m at 3.05g/t from 8m in hole SRB0232

o 26m at 2.14g/t from 24m in hole SRC0119

o 18m at 3.49g/t from 18m in hole SRB0290

·; Exploration continuing at Kalsaka, with encouraging results received at the Rondo, Zoungwa and ZR prospects

Peter Spivey, Chief Executive Officer of Amara, commented:

"The delivery of the Sega PEA is a key step in ensuring that cash flow is maintained at our producing mine Kalsaka. The resources at Sega, which are located within trucking distance of our existing plant, will significantly increase Kalsaka's mine life with limited capital investment required. In addition, the exploration results received from the Kalsaka-Sega complex have confirmed that there is significant upside resource potential. Amara is committed to its strategy of using its cashflow to develop its growth assets, providing flexibility to the Company as it grows into a mid-tier producer."

The PEA has been prepared by Richard Quarmby, Group Project Manager of Amara. It has also benefited from the input of three independent contractors: SENET, SRK and Digby Wells Environmental.

Management Conference Call

The management team of Amara will host a conference call for analysts and investors at 9:30am UK time today. Dial-in details are as follows:

A second conference call will be hosted at 9:30am EDT/2:30pm UK time today for North American analysts and investors. Dial-in details are as follows:

Mine Plan

Amara prepared a mine plan based on the mineral resources delineated at Sega to date. Open pit optimisations were calculated assuming a gold price of US$1,300 per ounce. The PEA was based on the following parameters:

A gold price of US$1,500 per ounce was used to reflect the Company's short term gold price forecast. Sega is a brownfield extension of an existing plant and as its initial life of mine is 21 months, it would not be appropriate to employ a more conservative, long term gold price forecast as the project's resources will be exhausted before this point.

The PEA has confirmed that Amara will have access to material at Sega that is of a higher grade than the remaining reserves at Kalsaka. The following mined tonnages were estimated to be contained in the engineered open pit design:

The weighted average resource grade of the oxide and transitional material at Sega is similar to the Kalsaka reserves. However the Company's geological model shows that the grade of the material processed from Sega will be higher than that at Kalsaka due to the high grade core of the mineralisation, which can be selectively mined.

Processing 

Throughput of the Kalsaka processing plant is expected to be maintained at 1.6Mtpa.

Capital Costs and Infrastructure

Capital costs associated with the commencement of production from Sega are expected to be US$9.5 million. The capex required to bring Sega online is limited as the Sega material will be processed in the existing plant at Kalsaka and there is good existing infrastructure in place. 

Operating Costs

The following operating costs are robust as they were estimated based on Amara's existing cost structures at Kalsaka and incorporated into the financial analysis:

*mining costs are given as US$/t mined. All other costs are given as US$/t processed

**includes haulage to the central Sega crushing facility

Material from Sega, which is located 20km north of Kalsaka, will be trucked to the existing Kalsaka plant. Trucking costs are estimated to be US$5.72 per tonne hauled (US$0.286 per tonne hauled per kilometre). Due to the higher grade of the Sega material, cash costs per Sega ounce are expected to be lower than the cash costs of Kalsaka ounces despite these additional transport costs.

Project Economics and Financial Analysis

Amara has produced a cash flow model for Sega based upon the geological, metallurgical and engineering work completed to date. The base case was developed using a short-term gold price of US$1,500 per ounce and includes applicable royalties, which currently include a 5% government royalty and a net smelter royalty of 1%, which is held by Royal Gold Inc. This latter royalty will be reduced from 3% to 1% in return for an upfront payment of US$2 million, which is not included in the initial capex of US$9.5 million.

Sega is expected to produce total post-tax cash flow of US$59.1 million and calculated sensitivities show the robust nature of the projected economics to operating assumptions.

NPV Sensitivity (post-tax) (US$000)

Next Steps

Amara will lodge the necessary documents with the Burkina Faso Government in late October 2012, as agreed, to allow them adequate time to review the technical details in order to grant an environmental licence and a mining licence and enable the trucking of ore to commence in H1 2013. Full details of the PEA in the form of a National Instrument 43-101 technical report will also be filed on SEDAR within the next 45 days.

The Company has received verbal authorisation from the Government to begin the infrastructure work associated with Sega in advance of the final mining licence being granted, which is testament to the Government's desire to see production commence at the project. This work includes a dedicated haul road between Sega and Kalsaka, the installation of crushing facilities at Sega and an upgrade to the power and transmission plants. Construction is due to commence before the end of the year.

Following a visit to Sega, Digby Wells Environmental was appointed to conduct an Environmental and Social Impact Assessment ("ESIA") in April 2012. With the help of local consultants including BECOREM in Burkina Faso, Digby Wells Environmental has made significant progress towards completing the specialist studies and also in sensitising the project's stakeholders to the potential effects. A draft ESIA report, including a provisional resettlement action plan, is expected to be issued at the end of October 2012. Work is underway on physically demarcating the affected areas and once this is completed, Amara will undertake a public consultation on the ESIA.

Exploration Update

Exploration at the Kalsaka-Sega complex is a primary focus for Amara. Drilling results received to date give confidence that there is further upside potential to Sega's current resources, with particularly encouraging intercepts logged at the Touli prospect. This upside potential is expected to ensure that production continues uninterrupted at the Kalsaka-Sega complex as the Company continues to develop its portfolio of growth assets.

At 30 September 2012, 18,881 metres of RC drilling and 16,583 metres of RAB drilling have been conducted by the Company on the 313km2 Sega licence area since the project was acquired. In addition in Q1, before Sega was transferred to Amara, Orezone Gold Corporation ("Orezone") conducted a 10,000 metre drilling programme on the Sega license area. The drilling covered 11 targets and the most significant intercepts recorded were at the Touli, Sampella, Bangassila, Tiba3Sud and KNW prospects. Further RC drilling was then conducted at Touli, Sampella and Bangassilla.

Significant intercepts from Touli include:

·; 23m at 1.35g/t from surface in hole SRC0017

·; 26m at 2.14g/t from 24m in hole SRC0119

·; 26m at 3.05g/t from 8m in hole SRB0232

·; 18m at 3.49g/t from 18m in hole SRB0290

Significant intercepts from the other prospects include:

·; 5m at 3.48g/t from 96m in hole SRC0052 at Sampella

·; 4m at 2.07g/t from 99m in hole SRC0083 at Bangassila

RAB drilling was also conducted at Touli as part of the exploration campaign, and 4,592m of RAB sterilization drilling was undertaken at Bakou and Gambo. Further RC drilling commenced at KNW in late Q3 and, together with drilling at Tiba3Sud, will be completed after the harvest in early November.

Significant intercepts from KNW include:

·; 6m @ 2.22 g/t from 63m in hole SRC0144

·; 11m @ 2.89 g/t from 25m in hole SRC0145

Please note that SRBs are RAB holes, and SRCs are RC holes. A significant intercept has a minimum width of 2m, a minimum grade of 0.4 g/t and a maximum internal dilution of 2m.

The full results of the 10,000 metre drilling programme conducted by Orezone are included in Appendix 1. The results of the RC drilling that Amara has conducted at Touli, Sampella, KNW and Bangassila are included in Appendix 2. The results of the RAB drilling conducted at Touli, Bakou and Gambo are included in Appendix 3.

In addition, exploration work is ongoing at Kalsaka, focusing on areas east of the existing K-zone pits along the K-zone shear structure. In-fill drilling at a line spacing of 50m has confirmed the continuity of mineralisation between the Rondo and Zoungwa prospects (known as the Z-R prospect) over a strike length of 900m. Amara believes there is further upside potential at Kalsaka, which the Company plans to mine once operations at Sega conclude. Resource estimations for these areas are expected to be completed during Q4 2012.

Mineral Resources at Segaii

Note: Resources presented in the above table are accurate as at 11 January 2010 (see note (i) below) and have not changed as a result of the drilling programme described in this announcement. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Qualified Person

Richard Quarmby is a "Qualified Person" within the definition of National Instrument 43-101 and has verified the data disclosed in this release and reviewed and approved the information contained within this announcement. Mr Quarmby is the Group Project Manager.

The delineation of the Sega resources and the 10,000 metre drilling programme were executed under the supervision of Pascal Marquis, SVP Exploration for Orezone, who is a Qualified Person as defined by National Instrument 43-101 and who has reviewed and approved the relevant technical information in this release. Orezone completed the 10,000 m reverse circulation drilling program and the rotary sample division of all the samples that were then handed over to Cluff who supervised the sample preparation and the analytical work reported here.

Peter Brown is a "Qualified Person" within the definition of National Instrument 43-101 and has verified the data disclosed in this release with regards to the exploration conducted at Sega for Amara, including sampling, analytical and test data underlying the information contained herein, and reviewed and approved the information contained within this announcement. Mr Brown (MIMMM) is the Group Exploration Manager.

For more information please contact:

NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS PRESS RELEASE

About Amara Mining plc

Amara (formerly 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, where the production profile has been enhanced by the recent acquisition of the neighbouring Sega project. Amara remains focused on its objective of becoming a mid-tier producer through the development of its Baomahun project in Sierra Leone and its Yaoure project in Côte d'Ivoire. With its experience of bringing new mines into production and a project pipeline spanning Burkina Faso, Côte d'Ivoire and Mali, Amara aims to further increase its production profile with its highly prospective exploration work across all assets.

This report includes certain "forward-looking information" within the meaning of applicable Canadian securities legislation.

All statements other than statements of historical fact included in this report, including, without limitation, the positioning of the Company for future success, statements regarding exploration, production estimates and future objectives of Amara, 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 Amara's expectations include, among others, risks related to international operations, timing of receipt of mining licence, the actual results of current exploration and drilling activities, the reduction of the net smelter returns royalty on Sega, the results of the Baomahun feasibility study, changes in project parameters as plans continue to be refined as well as the future price of gold. Although Amara 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. Amara does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

Non IFRS Measures - Cash cost per ounce is a financial measure used by many investors to compare mining companies on the basis of operating results and asset value. It is not a measure of financial performance, nor does it have a standardized meaning prescribed by IFRS, and it may not be comparable to similar measures presented by other companies. Investors are cautioned that cash cost per ounce should not be construed as an alternative to other financial measures determined in accordance with IFRS as an indicator of Amara's performance. This measure has been described and presented in this document in order to provide shareholders and potential investors with additional information regarding the Company's operational performance.

The mineral resources for Sega were estimated by Orezone in 2010. The 2010 resource estimate was updated from the resource estimate prepared by Met-Chem in February 2009 and included 12,471 m of new infill definition drilling, for a total of 104,752 m of core and reverse circulation drilling compiled up to December 2009. The resources are contained in thirteen separate block models, and for the most part are restricted to a vertical depth of 150 m.

The RC drilling programmes at Sega were undertaken by independent drilling contractors. All the Company's drill hole collar positions were pegged using a Garmin GPS unit and re-surveyed after drilling. The drill collars after survey were checked by an onsite geologist. Each 1.0m RC chipping passing through a cyclone is collected in a plastic bag and reduced in a multistage splitter to get a split of between 2kg and 4kg. Sampling was done under the supervision of the site geologist. Duplicate samples were collected at every 20th sample point and one blank inserted at every 20th point. Every fiftieth sample is a Certified Reference Material from Geostats. Samples were submitted to the in-house laboratory, dried, crushed and pulverised to 85-90% passing 106μm and analysed by bulk leach extractable gold assays for twelve hours.

The RAB drilling programme at Sega was undertaken by an independent drilling contractor. All the drill holes collar positions were pegged using a Garmin GPS unit and re-surveyed after drilling. The drill collars after survey were checked by an onsite geologist. Each 1.0m RAB chipping passing through a cyclone is collected in a plastic bag and 2m-composites are reduced in a multistage splitter to get a split of between 2kg and 4kg. Sampling was done under the supervision of the site geologist. Duplicate samples were collected at every 20th sample point and one blank inserted at every 20th point. Every fiftieth sample is a Certified Reference Material from Geostats. Samples were submitted to the in-house laboratory, dried, crushed and pulverised to 85-90% passing 106μm and analysed by bulk leach extractable gold assays for twelve hours.

RAB and RC check assays will also be submitted to external commercial laboratories in Burkina Faso as part of the Company's quality control procedures.

Appendix 1: Results of 10,000m drilling programme conducted by Orezone

Please note that SRBs are RAB holes, and SRCs are RC holes. A significant intercept has a minimum width of 2m, a minimum grade of 0.4 g/t and a maximum internal dilution of 2m.

Appendix 2: Results of the RC drilling conducted by Amara at the Touli, Sampella, KNW and Bangassila prospect

Please note that SRBs are RAB holes, and SRCs are RC holes. A significant intercept has a minimum width of 2m, a minimum grade of 0.4 g/t and a maximum internal dilution of 2m.

Appendix 3: Results of the RAB drilling conducted by Amara at the Touli, Bakou and Gambo prospects

Please note that SRBs are RAB holes, and SRCs are RC holes. A significant intercept has a minimum width of 2m, a minimum grade of 0.4 g/t and a maximum internal dilution of 2m.