Source - SMW
Amur Minerals has reported an operating loss of $5.77m for the year ended 31 December 2016, compared to a loss of $0.7m for 2015.

Administration costs for the year were $3.8m (2015: $4.1m) of which $1.4m was attributable to Net Foreign Exchange losses.

There was no financial income earned for the year (2015: $2.2m) as the Company had successfully completed the financing agreement with Lanstead Capital L.P in October 2015.

The Company also provided the following additional information in its full-year update:

Operational Programme:

Entering 2016 in a solid financial position having arranged financing in the amount of 12.5 million Sterling (US$ 18.75 million), we set out an aggressive two-year plan to move the project forward toward the completion of a Definitive Feasibility Study ("DFS").  This plan was developed and initiated at the beginning of 2016 targeting its completion on 1 January 2018.  The major objectives of the two-year plan included the following:

- 2016 Drill Programme: All drilling for 2016 and into the foreseeable future is to be focused on upgrading Inferred resources to that of Indicated allowing for inclusion in the definition of a Mining Ore Reserve.  Areas of newly identified resources will be immediately infill drilled on drill spacing suitable for designation of Indicated resources.  Mineral Resource Estimates ("MRE") are to be completed in accordance with JORC (2012) reporting standards.

- Mineral Resource Estimates: Post the completion of the 2016 drill season, newly reported Mineral Resource Estimates ("MRE") were expected to be compiled using a cut-off grade ("COG") of 0.4% nickel.  The increase in the COG allows the Company to evaluate resources likely to be mined at lower nickel prices whilst simultaneously permitting us to identifying the preferred mining method.  The MRE was to be constructed in a manner allowing the Company to define a preferred mining approach (comprised of open pit or underground production methods).

- Mining Ore Reserve ("MOR"): The MOR estimates are to be based on audited operating costs and externally derived metallurgical test work specific to each deposit.  Mining is planned using open pit and underground approaches.  Hence, the MOR will be defined based on the mining approach that produces the highest net operating profit per ore tonne.  Based on typical construction loan financing structures which range from 5 to 7 years, the Company targeted the identification of a MOR inventory of 60 million tonnes representing a 10 year production period.  The 60 million tonne selection represents approximately 1.5 times a typical project finance loan life period which is typically required by funding source which ensures a company's ability to repay a loan covering the preproduction construction period and start up requirements.  Identification of the MOR is to be completed in accordance with JORC (2012) standards.

- Metallurgical Test Work: The definition of the final metallurgical flowsheet and plant design is a critical step in defining the economic potential of Kun-Manie.  Numerous options are available to the Company and require careful consideration to provide an optimal plant design.  These options to be included in the design in the metallurgical test programme included consideration of potential commercial smelter off take agreements, the ability to generate multiple concentrate streams for off take options by commodity, the potential of generating a separate concentrate(s) for streaming by-product metals and determination of a concentrate which could be treated at a company owned furnace allowing for low grade matte generation.To fully evaluate the alternatives, a staged process was defined thus allowing for the results of each stage to be used to refine each ensuing metallurgical assessment phase.  The first phase consisted of the completion of bench scale test work to define maiden grade recovery curves at Kubuk ("KUB") and the Flangovy area of Maly Kurumkon / Flangovy ("MKF").  The comprehensive set of grade recovery curves defining metallurgical recoveries and preliminary slag forming composition of the concentrate by deposit, each deposit could be ranked by its metallurgical response and would enable confirmation that MKF remained the priority deposit at which the proposed mining operation would begin.  Moving from bench scale work to larger scale production style testing which is more accurate and reflective of production, a representative sample from existing core is to be selected and processed allowing for a more accurate and definitive evaluation of the metallurgical responses of the ore than would be defined by the less accurate bench scale grade recovery work.  The final phase of test work on concentrate production is to be implemented using a substantially larger representative sample allowing for the evaluation of the various potential options described above and derivation of the final plant flowsheet and plant design.

- Large Scale Metallurgical Test Work: Follow on pyrometallurgical test work on the concentrate derived from the large scale metallurgical test work will be undertaken.  The results will allow the Company to fully evaluate the flowsheet, technical and economic potential of an owner operated furnace converting all or at least a substantial portion of the concentrate to a low grade matte for sale to the international market.

- Site Ancillary Facilities: Development of site ancillary facilities is necessary to ensure the full implementation of the final selected design for the Kun-Manie operation.  This is planned for definition as a later stage component since the final MOR and plant design will impact the scale and cost of these components.  These components include power generation on site, fuel and tank farms to support power generation and mining operations, tailing handling and placement, housing and employee support and operation's administration and facilities.

- Road Access: A major component to the success of the operation will be the completion of an estimated 320-kilometre long access road linking the project site to the Baikal Amur ("BAM") rail line. This road will allow for resupply and support of the mine and for the transport of concentrate to the BAM rail line where a support facility will be built.  Representing approximately 30% of the initial capital cost (US$ 160 million), design and construction of the access road is key to the successful implementation of the project.  A four-phase approach has been defined.  The first stage was the selection of the better of three preliminary existing routes to be completed by qualified road construction specialists during which preliminary assessment of the route and access to road construction materials would be evaluated.  The selection of the route, topographic and hydrological maps were to be compiled along the selected road corridor for use in the next phase.  The second phase is comprised of a desktop design using the available digital information to select a more specific route which will be field verified and any necessary adjustments to the final route could be identified and included reducing geological and or hydrological hazards.  The third phase is comprised of the detailed engineering including the acquisition of detailed geotechnical and hydrological information for road and bridge designs, finalisation of the road design and related bridge and water crossing design.  The final stage is the construction of the road.

- Ulak Support Facility: The final major component of the Kun-Manie operation is the design and construction of an Ulak based support facility.  Located immediately adjacent the BAM rail line, a support facility is planned allowing for the delivery of supplies and material to the mine along the 320 kilometre access road.  Also included is a concentrate storage facility from which concentrate can be shipped to the international markets or delivered into the company owned concentrate treatment facility from which a low grade matte can be generated.   Progress and Milestones:

Substantial progress set out in related our 1 January 2016 planned programme has been made over the course of 2016 and into Q1 of 2017.  To highlight our major accomplishments, I note the following:

- Record drill productivities have been attained with a total of 19,785 metres having been completed at MKF during the 2016 season.  The drill cost per metre of US$ 40 was the lowest ever recorded during a field season and includes drilling, labour, fuel, consumables and analytical results.

- A newly compiled MRE for RungePincockMinarco ("RPM") reported 10 February 2017, substantially upgraded the 1 January 2016 reportable MRE.  Drilling during 2016 confirmed continuous mineralised higher grade structures to be present and the MRE was modelled based on a 0.4% nickel COG.  The current Kun-Manie MRE averages a nickel equivalent grade of 1.03% within a 101.3 million tonne resource.  Containing approximately 1.05 million tonnes of nickel equivalent metal, the nickel equivalent tonnage has been increased by 22.5% from 853 thousand nickel equivalent tonnes.  It is also noted that the configuration and thicknesses of the mineralisation are conducive to both open pit and underground mining.

- An increase of over 118% in the Measured and Indicated nickel equivalent tonnage has been identified based on the highly successful 2016 drill programme at MKF.  Successful infill drilling of areas previously identified as Inferred resource and the application of drilling all newly discovered mineralisation at a spacing allowing for the new resource to be assigned to the Indicated category is the reason for such a large expansion of the Measured and Indicated resource.  The global Measured and Indicated nickel equivalent tonnage was increased from 383,200 tonnes to 836,300 tonnes.  The near 450,000 tonne nickel equivalent expansion of Measured and Indicated resource alone is larger than many nickel sulphide companies report within their total resource inventory.  The average nickel equivalent grade was also increased from 0.72% to 1.03% (an increase of 43%).  On a mineralised tonnage basis, the Measured and Indicated resource contains 80 million ore tonnes which can be used in the definition of an MOR.

- As noted, the shift in drilling for Measured and Indicated has been highly successful and positioned the Company to consider various funding options.  Based on the adoption of drilling for reserve approach, the Measured and Indicated resource inventory now totals more than 80 million nickel equivalent tonnes for inclusion in the definition of the MOR.  This component of the resource indicates the potential to define the MOR of 10 to 13 years at a nominal production rate of 6.0 million tonnes per year (it is assumed that approximately 85% of the Measured and Indicated resource will be converted to MOR). Successful conversion of this portion of the resource to reserve is likely to cover the payback period of a construction loan.  Such loans typically range from five to seven years and financial institutions underwriting such loans prefer to fund an operation that has an MOR equal to 150% planned for processing over the life of the loan.  The 2017 drill programme will be targeting a 10.9 million tonne Inferred resource at KUB as well as resource expansion down dip, to the east and to the west.  Drilling is also planned at IKEN focused on resource expansion.  The Company plans to infill drill any newly discovered mineralisation for inclusion in the Indicated resource category.

- In an RPM mining trade off study for MKF conducted in late 2016 and reported in Q1 2017, a first stage analysis of the mineable potential of MKF was completed.  The study confirmed the Company's conclusion that both open pit and underground production are viable and the combination would result in improved economics as opposed to open pit mining only.  Using the 10 May 2016 study, compiled by SRK Consulting (UK) Ltd ("SRK"), RPM identified the mining potential to consist of a diluted mineable reserve totaling 44.5 million tonnes (approximately 7.5 years of mine production) averaging 0.75% nickel and 0.19% copper along the 2,100 metre long deposit model (excluding the 900 metre extension identified by the 2016 drill results).  The total tonnes of mined nickel were projected to be in the order of 332,200 with copper totaling 83,500 copper tonnes.  More than 87% of plus 0.4% COG resource from the total 2,100 metre long deposit (including Inferred) was identified to be suitable for mining. Based on the highly supportive and confirmatory work, the Company will have an independent and qualified consulting group derive a MOR at four deposits based on deposit specific operating costs per tonne, metallurgical recoveries of the recovered metals and the selection of the appropriate mining method(s) for each deposit.  In addition, rock slope stability for open pit consideration, underground support requirements and hydrological considerations will be included in the definition of the MOR.

- Work by SGS Minerals ("SGS") has confirmed metallurgical recoveries vary by deposit based on whole core and grade recovery curve determination.  Across all deposits, metallurgical recovery increases with increasing grade.  For MKF, Gipronickel Institute ("Gipro") (a subsidiary of Norilsk Nickel) also completed a large scale bulk metallurgical test on a near half-tonne bulk sample having an average grade of 0.70% nickel and 0.19% copper.  Metallurgical recoveries for both nickel and copper will exceed 80%. Having established that higher recoveries increase with increasing mined grade and that MKF mining potential study is projected to extract an average nickel grade of 0.75%, it is anticipated metallurgical recovery could be higher.  However, use of the current 80% recoveries for nickel and copper at MKF will provide a degree of conservatism in future evaluations.  A larger scale bulk metallurgical sample comprised of 7.4 tonnes of core from MKF will be processed to allow for the determination of the process flowsheet and plant design from which the sulphide concentrate will be generated.  The metallurgical test work programme for this sample will assess various alternatives including the potential to generate multiple concentrate products for consideration in off take agreements and the specific design of a furnace for a company owned concentrate treatment facility capable of producing a low grade matte.

- Ground based geophysics completed near the proposed processing plant site has identified potential sources of water for industrial use in the treatment of ore.  A drill programme is planned for the 2017 season to define the amount of water available from underground sources.  Additional geophysical work is planned for this season in the western area of the hydrological licence.

- Selection of the preliminary access road route was completed during the year and detailed topographic and hydrological maps have been compiled allowing for the next stage of the road design process to be implemented.  A specific route will be selected, examined and adjusted as necessary to allow for detailed engineering, design and construction.  This is a major component of the project and nearly a third of the initial capital expenditure of Kun-Manie is projected for this critical component to the successful completion of the project.

"As indicated above, the Company has made significant progress over the course of 2016, some of which have been reported as post 2016 events.  We have identified the presence of much higher grades available to mining, substantially increased our Measured and Indicated resource, confirmed that our future MOR will likely be substantially higher in grade than previously planned, that our MOR will likely be of sufficient size and grade to allow for project financing and begun to establish key metallurgical results for the treatment and eventual sale of concentrate and or low grade matte for the Kun-Manie ores.  These are all important achievements allowing for the continued advancing of the project toward a final project design and decision to initiate production.  Our aggressive plan to advance the project has already shown substantial and multiple benefits and we shall continue to proceed with our Q1 2016 programme.

"A great deal of work remains to be accomplished to attain our final object of the decision to place Kun-Manie into production and to fund the construction of the project.

"The above accomplishments would not have been possible without the full support, success and dedication of our ZAO Kun-Manie staff headed by our General Director Mr Anatoly Velma.  We are already benefitting from our Russian team's activities in 2017 as they have once again fully set up the Company to complete another field season of drilling and onsite engineering activities with the transport of new record tonnages over our winter ice road.

"For additional information and a more in-depth review of our 2016 results, our Chief Executive Officer, Mr Robin Young has provided significant detail on the successes of 2016 presented below.   Funding of Activities:

"The aggressive two-year programme was established on the basis of the Crede CG III Ltd. ("Crede") placing in the total amount of £12.5 million (US$ 18.75 million) to be delivered to the Company in five tranches at 90 day intervals.  As at year end 2015, the Company reported available cash to be £6.4 million (US$ 9.6 million). Entering the year, four of the five £2.5 million (US$ 3.75 million) tranches remained to be settled providing an additional £10.0 million (US$ 15.0 million) during 2016. Given the 1 January 2016 cash position and scheduled delivery of an addition £10.0 million (US$ 15.0 million) via the Crede placing, a total projected cash position of £16.4 million (US$ 24.6 million) was available covering the two-year period of 2016 and 2017.   "The budget to implement the aggressive two-year programme was estimated to require £13.3 million (US$ 20.0 million) leaving approximately £3.0 million (US$ 4.5 million) for coverage of the Group's administrative costs covering the two-year period.  With a defined budget and funding commitments to cover the DFS programme, the Company established a fast track plan to attain the DFS and implemented it in very early Q1 2016.

"Two significant events occurred during 2016 which are now beginning to impact the compilation of the aggressive DFS plan. Firstly, on 23 June 2016, the UK voted to exit the European Union.  This resulted in a substantial and rapid devaluation of the Pound Sterling reducing the cash available to the programme by 20%. Secondly, shareholders opted to discontinue the final two Crede tranches totalling £5.0 million (US$ 7.5 million). The combination of these two events has resulted in a shortfall of approximately £7.8 million (US$ 9.8 million) for completion of the DFS.

"In response to these events, the Company has revisited all working relationships and initiated cost cutting measures by utilising a larger component of qualified Russian companies, entered negotiations with Chinese companies to reduce anticipated higher costs associated with western companies and undertaken substantial portions of the DFS work internally under the direction of independent qualified organisations that are a part of the DFS compilation plan.  Presently, we will continue to advance the work on the DFS as aggressively as possible and are identifying specific aspects of the DFS which are not as critical to the determination of the economic viability of the project."




At 1:12pm: (LON:AMC) Amur Minerals Corporation share price was -0.82p at 5.78p