Shareholder Operational Update: Q2 2015

Kibo Mining Plc (Incorporated in Ireland)

(Registration Number: 451931)

(External registration number: 2011/007371/10)

Share code on the JSE Limited: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

("Kibo" or "the Company")

 

 

01 July 2015

 

Shareholder Operational Update: Second Quarter 2015

 

Kibo Mining Plc ("Kibo" or the "Company") (AIM:KIBO; JSE AltX: KBO), the Tanzania focused mineral exploration and development company, is pleased to announce an operational update to outline the current status of company activities and the extent of progress made to build the value of the Company's assets for shareholders.

 

QUARTER HIGHLIGHTS AND CEO COMMENTS

 

Kibo Mining has entered into a dynamic phase in its development with material progress being made across the asset portfolio.  Highlights of this development progress in the second quarter of 2015 include:

 

-    Signing of the Joint Development Agreement ("JDA") between Kibo and SEPCOIII, enabling the Mbeya Coal to Power Project ("MCPP") to be taken to the next level of development;

-    MCPP (Mining): Definitive Mining Studies confirmed the extremely robust and feasible nature of the Rukwa Coal Mine, with the Pre-feasibility Study one month from completion;

-    The MCPP (Power) development, bolstered by the signed JDA, has progressed greatly in terms of partner participation and advanced planning;

-    The MCPP is fast approaching financial close, and significant time has been spent on negotiation and planning in this regard;

-    Work on the Imweru project pre-feasibility study has commenced;

-    The Haneti project exploration objectives for 2015, after analysis of the latest high resolution aerial geophysical data, were confirmed and the proposed drill programme is ready for deployment.  It is planned to implement the programme immediately after the imminent Rukwa Geotechnical Drill Programme;

-    The two joint venture programmes (Morogoro and Pinewood) have commenced with the Morogoro exploration programme. A Morogoro soil sample batch that was in storage was submitted for laboratory analysiss for which results are awaited. A review and update of the current Pinewood Project technical reports is in progress for further field work.

-    Operational expenses for the reporting period remained within approved budget with no over-expenditure;

-    Financings undertaken in the quarter provided a solid underlying cash position within the company, covering operational expenditure for the medium term;

-    Negotiations with third parties to participate in or acquire various assets held by the Company continued. Successfully concluding such negotiations will bolster and/or protect the Company's underlying cash position and further increase investor confidence in Company projects.

 

 

 

Louis Coetzee, C.E.O. of Kibo Mining commented:

 

"We are very pleased to report to shareholders the tremendous progress the Company has made on shareholders' behalf during recent months despite the continuing turbulence in the natural resources equity environment.

 

Kibo has made strong progress in 2015, bolstered by the financial support demonstrated by an early conversion of warrants by Metal Tiger plc in January and thereafter by the additional funds raised from secondary placings. This update is designed to assist shareholders' understanding of the progress that is being made, the current position of Kibo and also the forward plans we intend to execute to further build the value of the company.

 

It is worth mentioning that we are participating in a race to value creation and in this regard two factors are prevalent.

 

·    Firstly, that Tanzania as a country is eager to see the development of its natural resources and is highly supportive of those companies investing properly in this regard.  The opportunities are immense and we are rapidly building the value of our in-country interests to reflect this. 

·   Secondly, that the bearish natural resource climate is potentially nearing its conclusion and a turnaround in fortunes is likely due. We are positioning Kibo in a manner that will draw investor interest and capital as that recovery ensues. When the recovery starts in earnest, there will be many companies vying for attention and we want investors keenly focussed on Kibo right from the start.

 

In the case of Kibo we feel attention by investors is warranted. In the MCPP we have a world class opportunity to develop a major strategic power generation asset in Tanzania. The Kibo programme is however much more robust than the MCPP only,  with interests in strategic precious, base metal and energy projects, lending diversity and depth to our business model and enabling investors to gain access to the substantial mineral resource opportunities of Tanzania.

 

Whilst share price pressures are frustrating, shareholders should note that Kibo is progressing at some pace, and there will be news flow in the coming days, weeks and months that will further demonstrate the progress being made."

 

KIBO MINING PLC COMPANY PROJECT OVERVIEW

Mbeya Coal to Power Project ("MCPP")

-          The required technical work for the project development phase of the MCPP is nearing completion:

 

ü  The mining PFS is currently 87% complete;

ü  The Power PFS was completed by end of FY 2014.  All planning and preparation for the next phases of the PFS is complete;

ü  The process to facilitate permitting, certification and licensing intensified during the reporting period, with increased interaction and negotiations with TANESCO and the Ministry for Energy and Minerals ("MEM"). In this regard, an extensive submission was made to the MEM outlining the strategic gap between power demand, strategic planning objectives and current installed capacity in the TANESCO Power System Master Plan;

ü  The Environmental Assessment scope of work and solicitation of contractors for this work component is complete. The formal environmental assessment will take place in two phases, namely Mining and Power;

Mining

The mining portion of the MCPP development remained on track and on schedule during the reporting period.  The following are the key highlights:

-          Phase 2, Stage 1, Definitive Mining Feasibility Study, (Mining PFS) commenced during this reporting period (RNS 1 April 2015);

 

-          A successful site visit to the Rukwa Coal mine site by Mining Consultants Minxcon, who act as the Qualified Persons ("QP") to the MCPP (Mining component), confirmed the conclusions and assumptions published in the Phase 1, Stage 1, Definitive Mining Feasibility Study Report, and approved commencement of Phase 2 of Stage 1;

 

-          The trade-off studies performed as part of the PFS identified potential for significant operating expenditure ("OPEX") reductions, thereby increasing project value and profitability potential. The highlights of these studies included:

 

ü  A 12 hour daylight shift cycle will be followed

ü  Primary and Secondary Transport will be performed by vehicle;

ü  The total overburden and inter-burden is minable through free-digging by Hydraulic Excavator. Blasting is therefore not required for waste stripping and will potentially decrease OPEX  significantly;

ü  The Surface Continuous Miner was proved to be a feasible mining method;

ü  Mine Infrastructure lay-out finalised;

 

-          The PFS is still below budget, on schedule and on target for release by end of July 2015.

Power

-          The planned continuation of the Definitive Power Feasibility Study ("Power DFS") was briefly interrupted by the development period required to ensure that the JDA reaches unconditional status by end of Q2. Substantial technical and developmental work was however done in the meantime which included:

 

ü  Defining the full Scope of the Power Feasibility Study

ü  Defining roles and responsibilities for the Power Feasibility Scope of Work:

Ø  Integrated Project Structure, of which a first appointment, a Project Coordinator, was made.

Ø  Owner's Team

Ø  Owner's Engineer

Ø  EPC Contractor

Ø  Independent Quantity Surveyor

 

ü  Scope of the Feasibility Level Environmental Impact Study.

ü  Technical integration with the Mining Definitive Feasibility Study

 

-          It is expected that the Power DFS will immediately resume full operational status upon completion of the above process. The following main aspects will be covered during this phase:

 

ü  Coal and ash analyses

 

ü  Site selection study

 

ü  Limestone resource study

 

ü  Power station basic design

 

ü  Prepare, evaluate and negotiate EPC technical specification

 

ü  Prepare, evaluate and negotiate O&M technical specification

 

ü  Feasibility study report sections

 

ü  Detailed Power Station Design

 

ü  Ash Disposal Study

 

ü  Water Management Study

 

ü  Geotechnical Investigations

 

ü  Grid Study

 

ü  Roads

 

ü  Permanent Staff Accommodation

Imweru

The continuation of the Imweru Definitive Feasibility study was approved and initial work is underway and will be fully implemented once adequate funding has been secured.

Desktop work on the project is currently in process after completion of a successful site visit by Minxcon, Kibo's independent consultants on the project.

Lake Victoria Programme - Excluding Imweru

This project remains under a Care and Maintenance programme.  No operational work was completed during the reporting period.

Morogoro Programmes

Due to the very low prospectivity of the Morogoro North Project it was discontinued and its license package was surrendered to the Ministry for Energy and Minerals in its entirety.

.

The Morogoro South Project (now called the Morogoro Project) was included in a Joint Venture with Metal Tiger PLC on January 19, 2015.  An exploration programme was designed comprising the following broad activities:

-          Follow up detailed soil geochemistry over targets identified in Matombo region (Block A Strike Extension) during the 2012 field programme

-          Exploration pits and trenches in the Matombo area

-          First pass exploration drilling in the Matombo area, Block A (Estimated 1,200m)

-          Detailed geological mapping to continue in all areas

-          Reconnaissance mapping the areas west of Morogoro

-          Stream sediment sampling and rock chip sampling in the areas west of Morogoro

An additional, reduced operational programme was accepted and approved, comprising the laboratory analysiss of an existing batch of samples in storage. In order to further define the southern extension of "Block A" gold mineralization, a limited follow up sampling program and an assessment and preliminary reconnaissance mapping exercise on PL6622/2010 and PL8299/2012 was also submitted for approval. The sample batch in storage was submitted for laboratory analyses and results are awaited. No other operational activities were approved during the reporting period.

Haneti Programme

Based on the findings and recommendations from previous studies, including a geochemical interpretation study completed in Q1 2015, a follow - up two-phase exploration programme was developed and approved.

Approved Exploration Programme

-          Phase 1: Analysis and interpretation of newly acquired high resolution aerial geophysical data.

-          Phase 2: Upon completion of phase 1, and provided that the interpretation of the data supports the planned objectives, the implementation of an exploration drill programme will follow.

Operational Results to Date:

Following positive results from a geochemical interpretation of the project, the Haneti exploration programme was provisionally approved for the implementation of Phase 1, only.  After acquisition of the geophysical data, which is currently being analysed and integrated into the existing geological database, the following preliminary results were obtained (as announced per RNS on 24 June 2015): 

-          High resolution magnetic and gravity data show the interpreted areal extent and geological structure of the Ni-Cu-PGM prospective Haneti-Itiso Ultramafic Complex (HIUC) confirming its continuity over 80 kilometers of strike length

-          A number of other areas have been identified within the HIUC showing similar magnetic and gravity signatures as the known ultramafic outcrops e.g. Mihanza and Mwaka Hills and which can be confidently interpreted as new areas of sub-cropping ultramafic rocks and targets for follow up exploration.

-          The interpretation results resolves some of the internal geological structure of the HIUC showing it to be comprised of a number of attenuated and folded ribbons of ultramafic rocks within the general granite-gneiss country rock which will assist geological interpretation and help focus exploration on areas of most potential.

-          The interpretation has identified a new zone of ultramafic rocks over a strike length of approximately 30 km similar to the HIUC which will be a new target zone for follow up exploration.

Pinewood

No operational work was completed during the reporting period.  However a review and update of the historic technical reports prepared in respect of Pinewood and surrounding Uranium deposits is being undertaken to further refine and define next exploration campaigns.

 

 

 

 

 

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	+44 (0) 207 382 8300	Beaufort Securities Limited	Broker
Oliver Morse	+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 JORC compliant defined resource (See Table 1 below), and is developing a 250-350MW mouth-of-mine thermal power station (Mbeya Coal to Power Project ("MCPP") with an established management team that includes Standard Bank as Financial Advisor.  Kibo is undertaking a Coal Mining Definitive Feasibility Study and a Power Pre-Feasibility Study for the MCPP with an integrated Coal-Power interim study report to be released in the near term. On 20^th April 2015, Kibo signed a Joint Development Agreement for the completion of the Definitive Feasibility Studies and development of the MCPP with China based EPC contractor SEPCO III.

 

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 the 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.

 

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 entered into a 50/50 Exploration Joint Venture with Metal Tiger plc.

 

Finally the Company also holds the Morogoro (gold) project where the company has also entered 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 Central and 25 g/t at Imweru East, the cut-off grade is based on a gold price of US$1,200 and a 90%  metallurgical recovery is assumed in calculation of cut-off grade. A base case of  0.40  g/t has been selected.

** Classification of Mineral Resources incorporates the terms and definitions from the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) published by the 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 content of this announcement including resource reports and the references to them.

 

Johannesburg

01 July 2015

Corporate and Designated Adviser

River Group