Katoro Gold plc (Incorporated in England and Wales)
(Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
04 May 2021
Katoro Gold plc ('Katoro' or the 'Company')
BLYVOOR GOLD TAILINGS PROJECT: CPR RESULTS
Katoro Gold plc (AIM: KAT), the AIM listed gold and nickel exploration and development company, is pleased to announce the results of a comprehensive Competent Person's Report ("CPR"), that reports on the results and findings of additional technical and financial work that was conducted on the Blyvoor Gold Tailings Project ("the Project") in response to the recommendations and findings of the Blyvoor Scoping Study announced in RNS dated: 07 May 2020 and 4 March 2021. Katoro is currently in the processes of finalizing a comprehensive funding package in accordance with the Blyvoor Joint Venture ("the JV") that will allow the construction, commissioning and operation of a mining and processing facility capable of processing 500,000 tonnes of tailings material per month, at an average Life of Mine ("LoM") gold grade of 0.29 g/t and confirmed recovery of 51%, before incorporating recovery gains from the latest metallurgical optimization tests. The optimization results indicated that overall recoveries of up to 60% can be achieved by milling the coarser fraction (+75µm) of the feedstock which comprises around 30% of the total Run of Mine ("RoM").
The findings of the CPR were subject to the results of the confirmatory and optimization metallurgical test work. Following receipt of all the outstanding metallurgical test results, the Company is now able to validate the findings of the CPR and further engage with prospective funders towards conclusion of funding arrangements as set out above.
The CPR comprises an advanced Pre-Feasibility level study, a SAMREC compliant reserve and resource statement, and a South African Mineral Asset Valuation ("SAMVAL") report for Blyvoor TSF 1, 6 and 7 and Doornfontein TSF 1, 2 and 3 gold tailings storage facilities.
Note: Previous technical work on the Project was reported in RNS's dated 15 December 2020 (Resource Results) as well as 30 September, 16 November, and 30 November 2020, (General Updates) respectively.
Highlights CPR
· Total project resource size of 1,410,000 oz gold consisting 500,000 oz gold in the measured category (35.5%), 368,000 oz gold in the indicated category (26.1%), and 542,000 oz gold in the inferred category (38.4%) (Table 1)
· TSF 6 and 7 was upgraded to Probable Reserve status containing 424,000 oz gold and 392,000 oz gold, respectively (Table 2).
· The mine plan includes 1,325,822 oz gold after applying a 2% dilution factor, a 95% Mine Call Factor, and accounting for 1% ore losses.
· The CPR demonstrates (before incorporation of the results of the recent metallurgical optimization work):
§ An unlevered Project Net Present Value ('NPV@7.9%') of US$ 114 million, a 33% Internal Rate of Return ('IRR') and a Return on Investment ('ROI') of 64%;
§ LOM of 25 years building to a production capacity of 500,000 tons per month with an overall production of 675, 842 ounces of gold over LOM;
§ Low-cost operation:
· With an estimated All-in Sustaining Cost ('AISC') of US$861 per ounce of gold;
· All-in Cost ('AIC') of US$1,067 per ounce of gold;
· Total Project capital costs of US$152m across the life of the Project, and
· Peak funding requirement of US$69m.
· The study utilised an average gold price of US$1,610 per ounce compared to the current price of c. US$1,800 per ounce;
· Additional metallurgical test work confirmed the current grade vs. recovery model from previous technical studies and no further metallurgical test work is required;
· Optimization studies revealed that by milling a portion of the feedstock (with coarser size fraction (+75 um)), overall recovery can be increased up to c. 60% from the current confirmed 51% average recovery over LoM and 53.5% for the reserve (TSF 6 and 7); and
· Following rigorous independent review, evaluation, and assessment, the Project demonstrates robust technical and economic viability.
Louis Coetzee, Executive Chairman of Katoro, said: "We are extremely satisfied and pleased with the results of the projects thus far. Completion of technical work was delayed substantially by repeated COVID - 19 restrictions in South Africa, but at the same time allowed for better and more detailed review and optimization work to be done.
The completion of the technical work and especially the independent SAMVAL valuation of the project once again confirms that the project is very robust in all aspects and puts the Company in a very strong position to finalize funding discussions as set out above. We are now in the process of determining to what extent the higher recovery rates may improve the already robust project economics and will be updating the market in this regard in due course".
This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.
CPR key outcomes and discussion
| CPR Element | Findings |
| Project Financials | For the total resource, the Study demonstrated an unlevered Project Net Present Value ('NPV@7.9%') of US$ 114 million, and a 33% Internal Rate of Return ('IRR') and a Return on Investment ('ROI') of 64%. Total estimated free cash flow of US$257.4m across the life of the Project. Note - The study utilised: · An average exchange rate of ZAR 17.02/USD over life of project. · An average gold price of US$1,610 per ounce over life of project. |
| Capital Cost | The Project has a peak funding requirement of US$69m (ZAR1.183 billion, comprising of ZAR1.177 billion capital and ZAR6 million rehabilitation premiums) in the construction year (Year 0), with a payback period of 2.6 years from the start of production. Note - The study utilised: · Capital estimates based on PFS level designs, utilising supplier quotations and benchmarking. |
| Operational Cost | The AISC was calculated as ZAR69/feed t which translates to US$861/oz The AIC was calculated as ZAR85/feed t which equates to US$1,067/oz Note - The study utilised: · Mining operating costs have been obtained from mining contractors. A 20% contingency has been applied to the selected contractor operating cost to make provision for the required level of accuracy. · On-mine overheads operating costs estimated from first principles, utilizing supplier quotations and benchmarking. · Processing operating costs estimated from first principles, utilizing supplier quotations and benchmarking. · Tailings operating costs estimated from first principles, utilizing supplier quotations and benchmarking. |
| Mineral Reserve and Resource | Total resource size of 1,410,000 oz gold of which 500,000 oz gold is measured status (35.5%), 368,000 oz gold is indicated status (26.1%), and 542,000 oz gold is in inferred status (38.4%) (Table 1). TSF 6 and 7 was upgraded to Probable Reserve status containing 424,000 oz gold and 392,000 oz gold, respectively (Table 2). Total ounces in mine plan are 1,325,822 oz gold after applying a 2% dilution factor and a 95% Mine Call Factor, and accounting for 1% ore losses. · Mineral Resource estimates were conducted and reported in accordance with the requirements of the SAMREC Code. · TSFs No. 6 and 7 contain mostly Measured and Indicated Mineral Resources and the resource estimation component is at Definitive Feasibility Study level. · TSF No.1, Doornfontein TSF's No. 1, 2 and 3 are only Inferred and are thus at Scoping Study level · Mineral Reserve estimates have been completed in accordance with the requirements of the SAMREC Code. · Measured and Indicated Mineral Resources have been converted into Probable Mineral Reserves. Additional work is required to upgrade Probable Mineral Reserves to Proven Mineral Reserves. |
Table 1: Mineral resource statement for Blyvoor Gold Mine TSFs effective 22 January 2021.
The operator for the Project is the Katoro Joint Venture.
| TSF | Mineral Resource Classification | Total | 50% Attributable to Katoro | ||||||
| Tonnes | Grade | Au Content | Tonnes | Grade | Au Content | ||||
| Mt | g/t | koz | Mt | g/t | koz | ||||
| TSF No. 6 | Measured | 30.5 | 0.32 | 318 | 15.25 | 0.32 | 159 | ||
| TSF No. 7 | Measured | 18.0 | 0.31 | 182 | 9.0 | 0.31 | 91 | ||
| Total Measured | 48.5 | 0.32 | 500 | 24.25 | 0.32 | 250 | |||
| TSF No. 6 | Indicated | 13.9 | 0.30 | 134 | 6.95 | 0.30 | 67 | ||
| TSF No. 7 | Indicated | 21.0 | 0.35 | 234 | 10.5 | 0.35 | 117 | ||
| Total Indicated | 34.9 | 0.33 | 368 | 17.45 | 0.33 | 184 | |||
| Total Measured and Indicated | 83.5 | 0.32 | 868 | 41.75 | 0.32 | 434 | |||
| TSF No. 1 | Inferred | 7.2 | 0.25 | 58 | 3.6 | 0.25 | 29 | ||
| TSF No. 6 | Inferred | 0.5 | 0.25 | 4.1 | 0.25 | 0.25 | 2.05 | ||
| TSF No. 7 | Inferred | 0.7 | 0.52 | 12 | 0.35 | 0.52 | 6 | ||
| Doornfontein TSF No. 1 | Inferred | 23.7 | 0.31 | 234 | 11.85 | 0.31 | 117 | ||
| Doornfontein TSF No. 2 | Inferred | 9.3 | 0.32 | 96 | 4.65 | 0.32 | 48 | ||
| Doornfontein TSF No. 3 | Inferred | 18.1 | 0.24 | 137 | 9.05 | 0.24 | 68.5 | ||
| Total Inferred | 59.5 | 0.28 | 542 | 29.75 | 0.28 | 271 | |||
| Notes: No cut-off applied. No geological loss applied. Mineral Resources are stated inclusive of Mineral reserves. Mineral Resources are reported as total Mineral Resources and are not attributed. | |||||||||
Table 2: Blyvoor TSF No.6 and TSF No.7 Mineral Reserve estimation effective 22 January 2021.
The operator for the Project is the Katoro Joint Venture.
| TSF | Mineral Reserve Classification | Total | 50% Attributable to Katoro | ||||
| Tonnes | Grade | Au Content | Tonnes | Grade | Au Content | ||
| Kt | g/t | koz | Kt | g/t | koz | ||
| TSF No.6 | Probable | 44,860 | 0.29 | 424 | 22,430 | 0.29 | 212 |
| TSF No.7 | Probable | 39,408 | 0.31 | 392 | 19,704 | 0.31 | 196 |
| Total | Probable | 84,276 | 0.30 | 816 | 42,138 | 0.30 | 408 |
| Notes: No Mineral Reserve cut-off applied. Mineral Reserves are reported as total Mineral Reserves and are not attributed | |||||||
| Grade and Recovery | Recent metallurgical test work confirmed historical results and the recovery utilized in the CPR and Valuation of 51% over LoM and 53.5% for the reserve (TSF 6 and 7). Further optimization tests revealed that significant increased recovery of up to 60% can be obtained by milling the coarser fraction of the Run of Mine before leaching. Process design trade off studies are currently being completed to understand the exact impact of this on the project economics. |
| Next Steps | Sufficient work has been completed to enter the detailed design phase with Mining, TSF and Plant contractors. The high-level next steps are: · Preparation of scope for bidding documents for Contractors by Owners Engineer. · Bidding and Evaluation. · Final Detailed designs · Construction · Operation |
Review by Qualified Persons
Information in this announcement that relates to the Blyvoor Mineral Resource is taken from the report titled " P20-006a_Katoro_BlyvoorTSF_CPR_Final" date 22 January 2021 (the "Report"). The Report contains a SAMREC-compliant Mineral Resource estimate, PFS and SAMVAL and was prepared for the Katoro TSF Gold Project (Blyvoor Joint Venture) in which Katoro Gold plc holds a 50% attributable interest. The Competent Person responsible for the submission of this document is Mr Daniel (Daan) van Heerden (Director, Minxcon): B Eng (Min.), MCom (Bus. Admin.), MMC, Pr.Eng. (Reg. No. 20050318), FSAIMM (Reg. No. 37309), AMMSA. Mr van Heerden has worked in the mining industry for over 30 years. He has extensive experience in managing underground and open cast mining operations in South Africa and abroad for world-class mining majors and junior mining companies. He was responsible for new business development for two major mining companies and has experience in mining mergers and acquisitions. He is currently heading the Mining Engineering division of Minxcon, where he is integrally involved in activities such as valuation, due diligence, finance structuring, change management required post the event, feasibility studies, life of mine plans, technical reviews and writing of technical reports for various commodities.
Information contained in this announcement has also been reviewed by Mr. Noel O'Keeffe, geologist, BSC. P.Geo, who is a Member of the Institute of Geologists of Ireland. Mr. O'Keeffe has several years' experience in the evaluation of gold projects.
**ENDS**
For further information please visit www.katorogold.com
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| Nick Emmerson Sam Lomanto
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Glossary of Technical Terms
| Au | Chemical symbol for gold | |
| "Cut-off grade" | The cut-off grade is the level below which material within an ore body does not contain sufficient value to economically justify processing into a final saleable form | |
| "density" | Measure of the relative "heaviness" of objects in terms of constant volume. Density =-mass/volume | |
| "g" | Gram - a metric unit of weight | |
| "g/t" | Grams per metric tonne - a measure of weight of the economic mineral (e.g. gold) is in each metric tonne of material to be mined | |
| "Indicated Mineral Resource" | That part of a mineral resource for which tonnage, densities, shape, physical characteristics, grade and quality can be estimated with a moderate level of confidence. Based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill-holes. The data-point locations are appropriate to confirm physical continuity, while they are too widely or inappropriately spaced to confirm quality continuity. However, such locations are spaced closely enough for quality continuity to be assumed. | |
| "Inferred Mineral Resource" | That part of a mineral resource for which tonnage, grade and quality can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified physical continuity with or without coal quality continuity. Based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill-holes which is limited or of uncertain quality or reliability. | |
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| "kg" | Kilogram (one thousand grams) - a measure of weight |
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| "koz" | One thousand ounces - a measure of weight |
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| "m" | A metre - a measure of length or thickness |
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| "Measured Mineral Resource" | A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit |
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| "Mineral Resource | A "Mineral Resource" is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilised organic material including base and precious metals, coal, and industrial minerals in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics, and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. |
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| "Mt" | Abbrev. for megaton (measure of weight). Equals 1 million tonnes |
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| "Probable Mineral Reserve" | "Probable Mineral Reserve" is the economically mineable material derived from a Measured or Indicated Mineral Resource or both. It is estimated with a lower level of confidence than a Proved Mineral Reserve. It includes diluting and contaminating materials and allows for losses that are expected to occur when the material is mined. Appropriate assessments to a minimum of a Pre-Feasibility Study for a project or a Life of Mine Plan for an operation must have been carried out, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. Such modifying factors must be disclosed (SAMREC definition). |
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| "Proved Mineral Reserve" | A "Proved Mineral Reserve" is the economically mineable material derived from a Measured Mineral Resource. It is estimated with a high level of confidence. It includes diluting and contaminating materials and allows for losses that are expected to occur when the material is mined. Appropriate assessments to a minimum of a Pre-Feasibility Study for a project or a Life of Mine Plan for an operation must have been carried out, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. Such modifying factors must be disclosed. (SAMREC definition). |
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| "SAMREC" | South African Code for Reporting Exploration Results, Mineral Resources and Ore Reserves |
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| SAMVAL | South African Code for the Reporting of Asset Valuations |
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| "t"
| A metric tonne - a measure of weight |
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