Pre-Feasibility for Yaoure confirms robust returns

14 May 2015 AIM:AMA

Amara Mining plc

(together with its subsidiaries, "Amara" or the "Group")

PRE-FEASIBILITY STUDY FOR YAOURE GOLD PROJECT CONFIRMS ROBUST FINANCIAL RETURNS

Drilling recommenced to progress project towards BFS

Amara is pleased to announce the results of the National Instrument ("NI") 43-101 compliant Pre-Feasibility Study ("PFS") for its 100% owned Yaoure Gold Project ("Yaoure") in Côte d'Ivoire.

HIGHLIGHTS

· PFS confirms that Yaoure is an outstanding gold development project, increasing confidence in the deposit and reducing risk

· Maiden Mineral Reserve reported of 2.7Moz (70.4Mt at 1.18g/t) within a pit design, which has been based on an optimal US$975 per ounce pit shell

· Further upside is demonstrated in a scenario based on PFS parameters, but including Inferred Mineral Resources ("MII scenario")1 - results are largely in line with Preliminary Economic Assessment ("PEA") of March 2014

· 6,000m drilling programme has commenced to upgrade a portion of the remaining Inferred Mineral Resources to the Indicated category

· Several optimisation opportunities to further improve Yaoure's strong economics under investigation, including the potential to improve head grade through selective mining of the higher grade CMA zone

John McGloin, Chairman and Chief Executive Officer of Amara, commented:

"Delivering a PFS for Yaoure is an important milestone in the project's advancement and the results confirm it is a robust project with the potential to generate strong financial returns. The PFS is just a snapshot on Yaoure's path to development and it does not represent the final project we are going to build, which is why we have also announced details of the MII Scenario today.

"We recommenced drilling at Yaoure in April 2015 with the objective of upgrading further Inferred resources to the higher confidence Indicated category. This will allow us to deliver a NI 43-101 compliant BFS closer to the original PEA, which unlocks Yaoure's full value. The results generated from this MII scenario reconfirm our belief that Yaoure has the potential to be one of the top gold mines in Africa, with annual production of 247,000 ounces over a 10 year LOM, and operating costs amongst the lowest on the continent, with all-in sustaining costs of US$648 per ounce.

"Importantly, the results of this MII Scenario also identify Yaoure as one of the few projects that remains strongly viable at a gold price of US$1,100 per ounce, breaking even at around US$800 per ounce. Further optimisation studies are already underway, not least the opportunity to improve the overall head grade through the selective mining of the CMA zone.

"We have clearly demonstrated that Yaoure should be advanced to a BFS and there remains significant exploration upside potential beyond the current 6.8 million ounce Mineral Resource. With funding secured to undertake further drilling and to deliver a BFS, I look forward to updating the market on Yaoure's progress over the coming months."

Steve Hill, Senior Project Manager of Tetra Tech, Inc., the independent consultant responsible for the PFS, commented:

"The Yaoure Gold Project has been developed as a robust, conventional, open pit and CIP project with strong potential for further optimisation. It is designed to deliver bulk mining, large scale production over a mine life in excess of 10 years. Its processing costs are particularly attractive compared to other West African projects due to Yaoure's location, which offers low cost power and abundant water. Prior to completing the BFS, Tetra Tech looks forward to involvement in a number of optimisation studies to assist Amara in determining the best long-term strategy for developing one of Africa's next major gold mines."

Notes

1. Amara is solely responsible for the MII scenario, it is not NI 43-101 compliant solely due to the inclusion of Inferred Resources in the economic analysis. It is calculated using the majority of the same assumptions as used for the PFS, including a 6.5Mtpa processing plant, capital costs, mining costs and processing costs.

Group Analyst Briefing and Conference Call

The management team will host a briefing for analysts at Amara's offices (29-30 Cornhill, London, EC3V 3NF) at 9:30am UK time today. Members of the Tetra Tech, Inc. team will be available after the meeting to answer questions. There will be a simultaneous conference call and dial-in details are as follows:

Dial in number (UK toll free) 0808 237 0030

Alternative dial in number: +44 (0)203 139 4830

Participant PIN Code: 76100909#

A presentation to accompany the conference call is available at www.amaramining.com and playback of the conference call will be available at http://www.amaramining.com/Investor-Relations/Webcasts shortly after the conclusion of the call.

For more information please contact:

About Amara Mining plc

Amara is a gold explorer/developer with assets in West Africa. The Group is focused on unlocking the value in its development projects. At Yaoure in Côte d'Ivoire, this will be done by increasing the confidence in the existing Mineral Resource and economics at the project as Amara progresses it through to Bankable Feasibility Study. At Baomahun, this will be achieved by gaining an improved understanding of the exploration upside potential and underground opportunity. With its experience of bringing new mines into production, Amara aims to further increase its production profile with highly prospective opportunities across both assets.

BACKGROUND TO PFS AND MII SCENARIO

Mineral Reserve Statement

The Mineral Reserve estimate is based on the Mineral Resources defined in the NI 43-101 compliant technical report entitled "Yaoure Gold Project, Côte d'Ivoire, Technical Report and Mineral Resource Estimates for Amara Mining Côte d'Ivoire SARL" with an effective date of 5 January 2015. The Mineral Reserves are the portion of the Mineral Resources that fall within a pit design, which was based on an optimised pit shell corresponding to a gold price of US$975 per ounce. The reported Mineral Reserve estimate is shown in the following table:

Notes to Mineral Reserve table

1. Canadian Institute of Mining and Metallurgy and Petroleum ("CIM") definitions were used for Mineral Reserves

2. The Mineral Reserve was estimated by the contents of a resource block model within a pit design. This design was based on an optimisation, in which only indicated Resources were enabled. The optimised shell selected corresponded to a gold price of US$975/oz

3. The Mineral Reserve is reported at a cut-off grade of 0.33 g/t Au. This cut-off has been derived from the breakeven level corresponding to a gold price of US$1,250/oz

4. A mining loss factor of 10% has been applied. Dilution has already been applied in the generation of bulk mining blocks in the resource model, measuring 12.5m x 12.5m x 10m

5. The Mineral Reserves were estimated based on the NI 43-101 Mineral Resources, both effective as of 5 January 2015

6. A 90.1% metallurgical gold recovery was used

Amara's Mineral Resource statement is included in Appendix A.

PFS confirms Yaoure's Strong Economics

The NI 43-101 compliant PFS supports the scenario of processing 6.5Mtpa of ore from an open pit operation to produce an average of 218,000 ounces of gold per annum over an initial 11 year mine life. The metallurgy is simple and non-refractory and the plant has been designed to process Yaoure's substantial resource achieving a recovery rate of over 90% using conventional whole ore leach processing methods in a carbon-in-pulp ("CIP") circuit. The project demonstrates strong economics due to its low processing costs, which are driven by an energy cost of 8 cents/kWh from a nearby hydro-electric power dam. Total cash costs (including refining and royalties) are US$739 per ounce over the LOM and all-in sustaining costs are US$782 per ounce.

MII Scenario

Following the delivery of the PFS, Amara will continue to progress Yaoure towards a BFS, which is expected to be completed in H1 2016. A drilling programme, initially consisting of approximately 6,000 metres, commenced at Yaoure in April 2015. Its objective is to upgrade a portion of the remaining Inferred Mineral Resources, so that these additional resources can be included as Mineral Reserves for a NI 43-101 compliant BFS.

The key technical, operational and financial parameters for the PFS and MII scenario are summarised in the following table, along with the parameters of the PEA 6.5Mtpa scenario:

This MII scenario is more representative of the project Amara will build and its key metrics are largely in line with the compelling PEA 6.5Mtpa scenario that was delivered in March 2014.

Comprehensive background information on the PFS and MII Scenario is included in Appendix B.

Economic Sensitivity Analysis

The economic analysis uses an average gold price of US$1,250 per ounce over the life of the PFS and MII Scenario. This gold price was used for the base case as it allows Amara to compare the PFS and MII scenario against the PEA, which was also based upon a US$1,250 per ounce gold price, and also against Yaoure's peers in West Africa.

This data is presented with a sensitivity analysis which examines the project economics at different gold prices:

PFS Discount Rate and Gold Price Sensitivity

MII Scenario Discount Rate and Gold Price Sensitivity

In the MII Scenario strong returns continue to be delivered at a gold price of US$1,100 per ounce, with a post-tax IRR that remains above 20% and a post-tax NPV of US$301 million.

Opportunities for Optimisation

The following key opportunities for optimisation were generated by the PFS. It is expected that they will further improve the project economics and Amara believes they warrant further investigation as part of the on-going advancement of Yaoure:

· Selective mining of higher grade CMA zone:

o In the current 6.5Mtpa plant - if a selective mining approach was used for the CMA zone and a bulk mining approach was used for the Yaoure Central zone, the overall grade going to the plant could be improved

o In a smaller plant - if only ore from the CMA zone was processed through a smaller processing plant, the upfront capital cost would be positively impacted and it could potentially deliver a stronger IRR

o In staged development - this would deliver a reduced upfront capital requirement, which may be more palatable for a company of Amara's size given the current challenging market conditions. Further work is required on the potential for a smaller plant and staged development

· Optimisation of fleet - the mining schedule of the PFS has been optimised to deliver the strongest production in the early years of Yaoure's mine life, however this requires a larger mining fleet than previously budgeted. After the first few years, a smaller fleet would be sufficient. Amara will investigate scenarios to better optimise Yaoure's fleet

· Dry tailings storage facility - initial work has suggested that it may be more cost efficient to utilise a dry tailings storage facility rather than the current wet tailings

· Generating revenue from waste rock - Amara has identified an opportunity to monetise the waste rock generated by the large scale mining operation at Yaoure, which has the potential to provide another source of revenue and reduce the long-term environmental costs and footprint

· Re-processing existing heap leach pads - initial auger drilling has indicated that the existing heaps on the Yaoure site contain approximately 50-80,000 ounces. It may be economic to reprocess these heaps in order to generate additional cash flow early in the mine life, with a low cost anticipated due to the nature of the heaps

Next Steps

Upgrading the Yaoure Mineral Resource

A 6,000m drilling programme has commenced to upgrade a portion of the remaining Inferred ounces in the Yaoure deposit to Indicated. This is expected to allow Amara to deliver a BFS in-line with the original PEA. Amara will report a Mineral Resource update in Q4 2015.

Further exploration of Yaoure Central zone

Historic RC drilling and rip line data, collected when Yaoure was being operated previously, has highlighted areas of the current block model defined as waste where gold mineralisation is likely to be present. While this data cannot be used within the current Mineral Resource estimate, it may indicate that by reducing the drill spacing in the Yaoure Central zone the estimate of total gold content could increase through demonstrating greater continuity of high and low grade areas. Undertaking this work is also expected to upgrade a portion of the Indicated resources to the Measured category, further increasing Amara's confidence in the deposit.

Exploration of wider Yaoure licence area

Utilising Amara's increased knowledge of gold genesis and mineralisation controls from the Yaoure deposit, the Group has embarked on a regional target generation programme, initially utilising geophysics and soil geochemistry. The Yaoure resource area is contained in only a small portion of Amara's total exploration licences and soil geochemistry and structural mapping have identified other areas similar to the resource area. Through further geological mapping, trenching and soil sampling, Amara intends to identify drilling targets with the potential to deliver satellite deposits for Yaoure.

Fully funded to deliver a BFS

The results to date indicate that Yaoure should be taken to the next level of engineering study and economic assessment. Work on the optimisation opportunities identified will be undertaken in conjunction with further in-fill drilling to upgrade a portion of the remaining Inferred resources to Indicated and to upgrade a portion of the Indicated resources to Measured.

Amara is fully funded to deliver a BFS for Yaoure following a placing to raise US$22 million in January 2015. In April 2015 IFC proposed a strategic investment of US$10 million and following the completion of this investment, Amara will be funded until the end of 2016. This will allow the Group time for discussions with banks and other financial institutions for the financing of Yaoure to the production stage.

Environmental licence and exploitation licence

Amara intends to submit its application for an exploitation (mining) licence to the government of Côte d'Ivoire in July 2015, which will include its Environmental and Social Impact Assessment. The Group expects to receive both its environmental licence and its mining licence by the end of H1 2016.

APPENDICES

A. Yaoure Mineral Resource statement

Yaoure Mineral Resource estimate within a US$1,500 per ounce pit shell, including cut-off grade sensitivity, as of 5 January 2015

Notes to Mineral Resource tables

1. The effective date of the Yaoure Mineral Resource estimate is 5 January 2015, prepared by Mario E Rossi, GeoSystems International, Inc. Pit optimisation work for this was completed by A. Wheeler.

2. The gold price used in the Mineral Resource estimate is US$1,500 per ounce, assuming an open pit mining scenario, processing via tank leaching. Pit slopes are 44º in oxide, 53º in sulphide. Recoveries have been assumed at 90%. Pit optimisation was completed by A. Wheeler for all prices shown here.

3. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

4. There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, and political or other relevant issues that may materially affect the resource estimates.

5. Totals and average grades are subject to rounding to the appropriate precision and some columns or rows may not compute exactly as shown.

6. The stated resources include dilution in the block model that relates to the level of low selectivity envisioned in an open pit operation, assuming 10m bench heights.

B. Background information on the PFS and MII Scenario

Mine Plan

Yaoure is planned to be developed and mined as a single open pit, comprising the CMA and Yaoure Central deposits. It is designed as a simple bulk mining operation and is based on an owner-operator scenario, using drill and blast with trucks and shovels for loading and haulage and with an average primary fleet of 130-150 tonne trucks, 22m3 electric hydraulic face shovels and 10-12m3 front end loaders.

The resulting strip ratio is relatively low at 4.5:1 in the PFS and 3.3:1 in the MII Scenario due to the shallow dipping nature of the mineralised zones.

Unlike the PEA which delivered the strongest average annual production in years 7-10 of the mine life, the PFS and MII Scenario's mine plans focus on bringing the strongest years of production to the start of the mine life. While this adds an additional capital requirement for pre-stripping, this is offset by the benefit of having stronger cash flow earlier in the mine life. This ensures Yaoure's value is unlocked as rapidly as possible and generates a total capital payback period of 3.0 years in the PFS and 2.3 years in the MII Scenario.

Metallurgy and Processing

Yaoure's mineralisation is simple and non-refractory. As part of the PFS work programme, Amara undertook a comprehensive metallurgical testwork campaign in 2014 and it demonstrated high gold recoveries over a 24 hour period using cyanide leaching. Whole ore processing via tank leach followed by CIP is a conventional processing method and it was selected as being the most cost effective, with an estimated design recovery rate of 90.1%.

The test work programme also further evaluated comminution process selection. SAG milling was excluded from the PEA in favour of three stage crushing as a result of a single composite sample. However the 2014 metallurgical test work programme has shown that the rock is softer than the single composite suggested and therefore amenable to single stage crushing followed by a SAG and ball mill combination, thus reducing its operating costs.

Operating Costs

Costs were calculated by Tetra Tech, Inc., using a range of data sources and first principle estimates.

In the PFS, Yaoure delivers an all-in sustaining cost of US$782 per ounce, benefiting from the large-scale operation and low relative input costs, and an all-in cost of US$968 per ounce. In the MII scenario, Yaoure delivers an all-in sustaining cost of US$648 per ounce and an all-in cost of US$827 per ounce.

Cost Breakdown in PFS and MII Scenario

Processing costs

One of the key cost drivers for gold mines is the price of power. Yaoure is located 5km from the Kossou dam and power station, which offers low-cost grid power from a combination of hydro-electric power and oil & gas generated power from other power stations in country. The processing plant is powered exclusively by grid power.

Based on tariff proposals from the Côte d'Ivoire state electricity provider, Compagnie Ivorienne Electricité (CIE), an average power cost of 8 cents/kWh is estimated, which is significantly lower than the average cost of heavy fuel oil generation (20-25 cents/kWh) or diesel generation (30-35 cents/kWh) in West Africa. This represents a distinct advantage for Yaoure in terms of project economics, which is realised in the relatively low processing costs of US$10.63/t processed in the PFS.

The PFS also utilises SAG milling, which is lower cost than the three stage crushing used in the PEA. Combined with the relatively low reagent consumption of the Yaoure ore, this delivers a low processing cost per tonne.

Mining costs

Yaoure benefits from low mining costs due to:

· Low cost power - electric shovels form part of the mining fleet in order to fully utilise the availability of low cost grid power

· Low oil price - the PFS and MII scenario are based upon a five year quote for diesel fuel priced at US$0.84/litre

· Rationalised site layout to minimise cycle times to waste rock dumps

· Owner-operator mining - contractor mining is higher cost in terms of mining cost per tonne

· Simple ore body that is amenable to a bulk mining approach - less costly than selective mining approach

· Single pit - all ore will be trucked from one pit covering the two zones so trucking distances are optimised

· Large operation that benefits from economics of scale

· Locally produced explosives for blasting

Other factors influencing operating costs

Yaoure's location presents other infrastructural benefits, besides the low-cost power and abundant water supply, such as a high quality road network connecting the project to the capital Yamoussoukro (40km) and the port of Abidjan (280km). There is also good accommodation and a mining university in Yamoussoukro offering a skilled workforce in the region.

Capital Costs

The total capital cost for the LOM is estimated at US$549 million, a small increase compared to the US$524 million included in the PEA. This is due to the inclusion of a mining pre-strip to allow higher grade ore to be accessed in the early years of the mine life, strengthening overall economic returns. Of this total, pre-production capital costs total US$447 million, including a contingency of US$53 million.

Tetra Tech, Inc. assesses its capital estimate for the plant and infrastructure to be accurate to ± 30%. A breakdown is set out in the table below:

The plant and infrastructure capital cost is in line with the original estimate of US$244 million set out in the PEA. The LOM cost of the mining fleet in the PFS is similar to the PEA, however a larger fleet is purchased upfront to allow stronger production in the mine's early years. This is off-set by savings in sustaining capital.

The Total Sustaining and Closure Capital over the LOM includes the mine closure costs and the development of the TMF. A breakdown is set out in the table below:

The closure costs are stated net of an estimated US$15 million salvage value for the mining fleet at the end of the mine life.

Fiscal Terms

Amara participated in discussions between the Government of Côte d'Ivoire and a number of other mining companies operating in country in the drafting of a new mining code. The new code was approved by Parliament in early March 2014. The PFS is based on the 2014 mining code, implementing fiscal regulation and recent precedent mining agreements in country. The assumptions are provided in the table below:

The Government of Côte d'Ivoire is entitled to a 10% free carry, as is usual in Francophone West Africa, once Yaoure's exploration licence is converted to an exploitation (mining) licence. The figures in this announcement are based on Amara's current 100% ownership of the project.

The project will also benefit from an exemption against VAT, preventing the excessive build-up of taxation debtors due from government seen in other West African jurisdictions.

PFS Preparation

The PFS has been prepared by Amara with input from GeoSystems International Inc., which reported the Mineral Resource estimate, Tetra Tech, Inc., which proposed the engineering design and cost estimates for the process plant and associated infrastructure for the Project, Adam Wheeler, an independent mining consultant, who provided the optimised pit designs, and AMEC plc, which reviewed the metallurgical work. AMEC plc is also responsible for the Environmental and Social Impact Assessment for Yaoure.

A NI 43-101 compliant technical report supporting the results of the PFS will be published on Amara's website in the coming months.

The MII Scenario is solely the responsibility of Amara.

Qualified Person

Andrew Carter is a "Qualified Person" within the definition of NI 43-101 and is responsible for the mineral processing and recovery methods upon which the PFS is based. He has reviewed and approved the relevant technical information relating to the recovery methods in this release. Eur.Ing. Carter (CEng., MIMMM, MSAIMMM, SME) is General Manager, UK and Chief Metallurgist with Tetra Tech Inc.

Richard Elmer is a "Qualified Person" within the definition of NI 43-101 and is responsible for the TMF design upon which the PFS is based. He has reviewed and approved the relevant technical information relating to tailings management in this release. Mr Elmer (BSc, MSc, CEng, MIMMM) is a Principal of Knight Piésold Limited.

Stephen Hill is a "Qualified Person" within the definition of NI 43-101 and is responsible for the Infrastructure upon which the PFS is based. He has reviewed and approved the relevant technical information relating to the infrastructure in this release. Mr Hill (BEng, CEng, MIMechE) is Senior Project Manager with Tetra Tech Inc.

Leonard van der Dussen is a "Qualified Person" within the definition of NI 43-101 and is responsible for the Capital Cost estimation upon which the PFS is based. He has reviewed and approved the relevant technical information relating to the cost estimation in this release. Mr van der Dussen (MSc (QS), PrQS) is a Project Cost Consultant and Senior Partner with VDDB Project Services.

Adam Wheeler is a "Qualified Person" within the definition of NI 43-101 and is responsible for the pit design and mining schedule upon which the PEA is based. He has reviewed and approved the relevant technical information /relating to the mining schedule in this release. Mr Wheeler (BSc Mining, MSc Mining Engineering, C Eng, Eur Ing)) is an Independent Mining Consultant.

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

Mario Rossi is a "Qualified Person" within the definition of NI 43-101 and is responsible for the estimation of the Yaoure Mineral Resource. He has reviewed and approved the relevant technical information relating to the resource estimates in this release. Mr Rossi (Fellow AusIMM, Member CIM, Member SME) is Principal Geostatistician of GeoSystems International, Inc.