TIDMLION
RNS Number : 7337W
Lionsgold Limited
16 November 2017
16 November 2017
Lionsgold Limited
("Lionsgold", "LION" or the "Company")
Feasibility Study Results and Next Mine Target
Lionsgold, the gold-focused exploration company with assets in
India and Finland, and a fintech subsidiary that provides online
accounts backed by physical gold, is pleased to release the final
results of the NI 43-101 compliant Feasibility Study ("FS") on the
Jonnagiri Gold Project ("Jonnagiri") and provide an update on its
activities regarding the Kolar tenements owned by Geomysore
Services India Pvt Ltd ("Geomysore") in which Lionsgold holds a
21.15% interest.
Geomysore holds exploration rights covering in excess of
900km(2) in India including a granted 30-year mining lease at
Jonnagiri covering 6km(2) . The Jonnagiri Gold Project is situated
in the state of Andhra Pradesh. Concurrently to negotiations
relating to land acquisition at Jonnagiri, Geomysore has now
embarked on an internal scoping study on their South Kolar Project
("South Kolar") situated in the Southern part of the Kolar Gold
Field also located in the state of Andhra Pradesh. South Kolar is
an area covered under two Mining Lease Applications, covering
approximately 10km(2) each, and Geomysore has signed a Memorandum
of Understanding with the government of Andhra Pradesh to develop
the areas into commercially viable mines.
Highlights
-- NI 43--101 compliant Feasibility Study completed.
-- The Base Case production profile is based on the 151,020
Probable Reserve gold ounces only and shows a Net Present Value of
USD$28.2 million (pre-tax) (based on USD$1 = INR67.08) applying an
8.48% discounted cash flow rate (appropriate rate determined by
Indian tax and accounting advisors).
-- The Internal Rate of Return for the Base Case is 24.0% pre-tax and 17.8% post-tax.
-- The Total Production Case, which includes the processing of
low grade stockpiles and the Inferred Resource within the optimised
pit shell, produces an NPV of USD$34.9 million (pre-tax) applying
8.48% discounted cash flow rate.
-- The IRR for the Total Production Case is 28.0% pre-tax and 20.9% post-tax.
-- Land acquisition negotiations still in progress with local
landowners to achieve a commercially acceptable price to
Geomysore.
-- At full production Jonnagiri is forecast to produce
approximately 25,000 ounces of gold per annum.
-- Geomysore's portfolio contains numerous exploration and
development targets and the South Kolar Project represents the next
target contemplated for mine development.
Cameron Parry, Lionsgold CEO, commented: "We are pleased to
report that the Feasibility Study is complete and demonstrates a
robust project that can be developed into India's first privately
owned gold mine.
"Mine development at Jonnagiri is subject to agreement for land
acquisition with relevant landowners. Should commercial agreement
be reached, subject to financing, the building of a mine at
Jonnagiri could commence as early as Q2 2018. The build is planned
to take 24 months and at full production the Jonnagiri mine is
forecast to produce around 25,000 oz of gold annually, which would
contribute more than a quarter of India's gold production based on
current domestic output.
"We look forward to updating shareholders as and when able,
noting the commercial sensitivities that exist around negotiations
relating to land acquisition and leasing, contracting and financing
of Jonnagiri.
"Concurrent with trying to progress to a mine at Jonnagiri, an
internal scoping study in respect of Geomysore's South Kolar
Project has commenced and is currently targeted as the next gold
mine to be developed by Geomysore from its portfolio of over 30
licences and applications throughout India with priority rights
covering in excess of 900km(2) ."
Jonnagiri Gold Mine Feasibility Study Summary
The Jonnagiri Feasibility Study is NI 43-101 compliant and the
Feasibility Study used a domestic market gold price being the three
year average of Indian Bullion Jewellers Association ("IBJA")
Price, INR2,806 per gram (equivalent of USD$1,301/oz based on USD$1
= INR67.08). Gold recovery has been estimated at 92.4% through a
Gravity - CIL (carbon in leach) processing circuit.
The base case production profile is based solely on the 151,020
ounces of Probable Reserve from the Indicated Resource ("Base
Case"). In parallel to the Base Case, a total production model was
developed where all available ore was processed, being the Probable
Reserve, the debris (unclassified material), part of the Inferred
Resource and some low grade material to be used in the event the
plant was at times underutilised ("Total Production Case").
The Jonnagiri mine will use conventional open pit mining with
gold recovered by standard gravity and Carbon In Leach processing
to produce a dore on site. Inputs to the feasibility study are
presented as per Table 1 below.
Table 1 -Base Case inputs in the Feasibility Study
Life Of Mine
---------------------
Ore processed 2.8Mt
----------------- ---------------------
Ore throughput 500kt/a (1.5kt/d)
----------------- ---------------------
Gold grade 1.68g/t gold
----------------- ---------------------
Expected gold
recovery 92.4%
----------------- ---------------------
Stripping Ratio 4.6:1
----------------- ---------------------
Gold produced 139.5koz gold
----------------- ---------------------
Capex to first INR2,622m (US$39.1m)
Production*
----------------- ---------------------
Operating Cost US$25.2/t ore milled
**
----------------- ---------------------
Cash Cost (inc. US$571/oz
royalty)
----------------- ---------------------
* Includes capitalised operating
costs of US$1.8m
** Includes: Mining, Plant, Onsite
G&A and head office costs
The key outputs of the Project as reported in the FS Base Case,
based on mining only the Probable Reserve of 151,020 ounces of
gold, are as per Table 2below (based on USD$1 = INR67.08).
Table 2- NPV calculation - Base Case
Pre Tax Post Tax
-------- ---------
US$M US$M
------------ -------- ---------
NPV(5%) $39.9 $23.1
------------ -------- ---------
NPV(8.48%) $28.2 $14.6
------------ -------- ---------
NPV(10%) $23.9 $11.6
------------ -------- ---------
IRR 24.0% 17.8%
------------ -------- ---------
In parallel to the Base Case schedule which processed only the
Probable Reserve (Indicated Resource), a Total Production Case
model was developed where all the available ore was processed,
subject to tailings dam capacity. The ore processed will be the
Probable Reserve, the debris (unclassified material), part of the
Inferred Resource and if the plant was underutilised, the low grade
material to 'fill the plant'. The Total Case scenario adds value to
the Base Case without spending additional capital for the project.
The IRR for the Total Case indicated an even more robust project.
The key outputs of the financial analysis for such assumptions are
shown in Table 3 below (based on USD$1 = INR67.08).
Table 3- NPV calculation - Total Case Production
Pre Tax Post Tax
-------- ---------
US$M US$M
---------- -------- ---------
NPV5% $47.6 $28.3
---------- -------- ---------
NPV8.48% $34.9 $19.2
---------- -------- ---------
NPV10% $30.3 $15.9
---------- -------- ---------
IRR 28.0% 20.9%
---------- -------- ---------
Geomysore is currently engaged in negotiations with relevant
landowners to purchase approximately 350 acres of land required for
the development of the East Block open pit mine and other
associated infrastructure, for example: Processing Plant, Tailing
Storage Facility, Waste Rock Dumps and Water Reservoir. Current
expectations of landowners are in excess of the expected market
rates and therefore Geomysore is persisting with discussions to
achieve a fair market rate for acquisition.
South Kolar Project
Whilst progressing negotiations with landowners regarding the
Jonnagiri Gold Project, Geomysore has initiated an Internal Scoping
Study ("Scoping Study") on their South Kolar Project ("South
Kolar") which is situated in the state of Andhra Pradeshin the
southern part of the Kolar Gold Field ("KGF"), which historically
produced 25 million ounces of gold over 100years of operation.
Geomysore initially obtained the Reconnaissance Permit ("RP") on
the south Kolar area and subsequently a 20km(2) area Prospecting
Licence ("PL"), which covered the Mallappakonda gold prospect and
extensions of the Chigarungunta gold mine.
During the PL licensing stage, Geomysore carried out detailed,
geological, geochemical and geophysical exploration which was
followed with 8,000m of Diamond Core ("DC") and Reverse Circulation
("RC") drilling. Some of the significant intersections from the
Mallappakonda prospect include 21.5m @ 5.5g/t and 19m @ 2.7 g/t.
Based on the drill data, Mining Associates Ltd prepared an ore body
model and reported a JORC compliant resource of 195,000 ounces in
Measured (33,000 Oz), Indicated (83,000 Oz) and Inferred (79,000
Oz) categories. Additional resource drilling will be required and
is being planned for once and subject to the Mining Leases are
granted.
Geomysore has applied for two mining leases. The first
Mallappakonda - Chigarugunta (10km(2) ) and the second Sanganapalli
- Bisanattam (10km(2) ), covering the entire PL area. As both
Mining Lease Applications ("MLA") are emanating from the PL, they
are valid under the amended mining act.
The Internal Scoping Study ("Scoping Study") includes
preliminary beneficiation test work of the Mallappakonda ore body
and refinement of the previously prepared ore body model. Drill
core samples of the Mallappakonda prospect have been submitted to
the laboratory at the Indian Bureau of Mines at Bangalore and the
test work results are expected within 90 days. During this period
technical teams of Geomysore are engaged in assessing the water,
power and land infrastructure in and around the project area.
Geomysore plans to submit the Scoping Study once finalised, to the
Government of Andhra Pradesh, which is required for further
processing of the Mining Lease Applications.
Geomysore has signed a Memorandum of Understanding ("MOU") with
the government of Andhra Pradesh to develop both mining leases
(subject to approval), into commercially viable mines including
fast-tracking, where possible, the approvals process for the mining
leases, water and power.
The technical information in this statement which relates to the
Feasibility Study on Jonnagiri is based on information compiled by
Mr Gordon Cunningham who is a full-time consultant with Turnberry
Projects Pty Ltd (Johannesburg, South Africa), a Professional
Engineer with the Engineering Council of South Africa and a Fellow
of the South African Institute of Mining and Metallurgy. Mr
Cunningham, as lead FS consultant, consents to the publishing of
the information in relation to the FS in the form and context in
which it appears.
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
For further information, please visit www.lionsgold.com or
contact:
Lionsgold Limited Tel: +44 (0)203778 0578
Cameron Parry (Chief Executive Officer)
WH Ireland Limited (Nominated Adviser) Tel: +44 (0)113394 6600
Tim Feather/Ed Allsopp
Smaller Company Capital Limited (Joint Broker) Tel: +44 (0)203651 2911
Rupert Williams / Jeremy Woodgate
Beaufort Securities Limited (Joint Broker) Tel: +44 (0)20 7382 8300
Elliot Hance
Tavistock (Financial PR) Tel: +44 (0) 207920 3150
Edward Lee
About LIONSGOLD
Lionsgold is a London Stock Exchange AIM market quoted,
gold-focused company involved in the exploration, production and
retail application of physical gold, with gold assets in India and
Finland and a majority owned financial technology company.
Lionsgold's three core focuses are:
-- Strategic partnership with leading India gold exploration and
mine development company, Geomysore, in which Lionsgold holds
21.15%;
-- Majority ownership of a financial technology platform
providing gold backed online accounts for people to hold and
utilise physical gold; and
-- Gold exploration and production in Central Eastern Finland.
This information is provided by RNS
The company news service from the London Stock Exchange
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