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 [1]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.

 

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 Thöle 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 NI43-101 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 with Stage 1 Phase 1 positive results now released and a Power Pre-Feasibility Study for Rukwa with initial positive findings already released.  The Company is now engaged with a number of major Independent Power Producers and other organisations and seeking to secure a commercial partnership or partnerships, to finalise feasibility work across the project and move toward the construction phase.

 

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 a Preliminary Economic Assessment already completed. As part of the Kibo Gold Portfolio, Kibo also holds the Morogoro Gold project where the company is seeking a Joint Venture partner to continue active exploration activities at this highly prospective opportunity.

 

Kibo also holds the Haneti Project on which the latest technical report confirms prospectivity for nickel, PGMs, gold and strategic metals including Lithium.

 

Kibo Mining further 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 Type	Classification	Cut- off (g/t)	Specific Gravity	Metric Tonnes (t)	Short Tons	Gold Grade (g/t)	Contained Gold 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
Central
	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 Centraland 25 g/t at Imweru East, the cut-off grade isbased on a gold price of US$1,200 and a 90%  metallurgical recovery is assumed in calculation of cut-offgrade. A base case of  0.40  g/t has been selected.

** Classification of MineralResources incorporates the terms and definitions from the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) published bythe 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 MINERALRESOURCE 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)	1.69	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)	1.61	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)	1.27	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 19^th 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 17^th 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 31^st  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