TIDMASA
RNS Number : 5965F
ASA Resource Group PLC
19 May 2017
Asa Resource Group plc
("Asa Resource", "the Group" or "the Company")
Operations and Explorations Q4 Update
(1 January to 31 March 2017)
Asa Resource is pleased to provide an update on operations and
exploration activity for the quarter ended 31 March 2017, including
an overview of recent events post the period end.
Quarterly operational highlights
The detailed performance figures for each mine are quoted in the
latter part of this update and relevant additional management
commentary follows the highlights.
ASA Gold - Freda Rebecca Gold Mine (Zimbabwe)
-- Revenue decreased by 16% to $15.5m (Q3: $18.4m)
-- Tonnes milled decreased by 27% to 231,739t (Q3: 319,026t)
-- Average feed grade increased to 2.04g/t (Q3: 1.78g/t)
-- Gold recovery rate increased by 0.4% to 83.2% (Q3: 82.8%)
-- 12,462oz of gold produced in Q4 (Q3: 15,365oz)
-- All-in sustaining C3 costs increased by 22% to US$1,291/oz (Q3: US$1,055/oz)
-- C1 cash costs were 16% higher at US$1,113/oz (Q3: US$956/oz).
-- Average gold price received was US$1,241/oz (Q3: US$1,195/oz)
-- Zindico Consortium legal update: FRGM requests High Court to
dispose of the matter by dismissing the claim with punitive
costs
-- Business Interruption Claim progressing
ASA Gold - Zani-Kodo JV (Democratic Republic of Congo)
-- Three out of four exploration permits renewed until 2029
-- Funding options and engagement with potential JV partners ongoing
-- Discussions with the DRC Minister for Mines and local partners continue
ASA Nickel - Trojan Nickel Mine (Zimbabwe)
-- Production of nickel-in-concentrate increased by 13% to 1,771t (Q3: 1,571t)
-- Head grade was 13% higher at 1.684% (Q3: 1.495%)
-- Recovery was 4% higher at 89.2% (Q3: 85.6%)
-- Average net realised nickel-in-concentrate price was
US$6,675/t (Q3: US$7,004/t), reflecting a 5% decrease in global
nickel prices this quarter
-- Nickel sales volume were 1% higher at 1,631t (Q3: 1,610t)
-- C1 cash costs for nickel-in-concentrate decreased by 20% to US$4,955/t (Q3: US$6,159/t)
-- All-in sustaining C3 costs of nickel-in-concentrate decreased
by 31% to US$4,549/t (Q3: US$6,554/t)
-- Re-deepening project progress continues to extend life of mine by 5 years
-- Smelter Restart Project is 82% complete
ASA Diamonds - Klipspringer (South Africa)
-- New coarse tailings programme started in January 2017
-- Average price achieved increased to $32.86/ct (Q3: $17.91/ct)
but this was offset by grade and recovery
-- Metallurgical testing of tailings underway to understand why sampled grade not achieved
Group financial update
In light of recent circumstances, the Board considers it
appropriate to update the market as to its financial performance
for the year ended 31 March 2017. Please note that these figures
are unaudited and may be subject to change:
-- Revenue up 0.6% to $122.0m (FY2016: $121.3m)
-- EBITDA increased to $20.5m (FY2016: $0.3m loss), a significant improvement on 2016
-- Both Freda Rebecca and BNC operating profitably
-- Cash balance at 31 March 2017 $2.1m (FY2016: $7.4m), decline
in cash due mainly to mismanagement of cashflows and capital
expenditure at BNC, Freda Rebecca and investment on Zani Kodo gold
project
-- Cash generated from operations of $17.8m (FY2016: $0.7m), a
90% (FY2016: 100%) conversion ratio of EBITDA to cash
-- Total assets (before any impairments as described below) of
$235.5m (FY2016: $221.3m) and total liabilities of $100m (FY2016:
$85m)
Potential impairments:
-- Zani Kodo has an intangible asset with a carrying value of
$56.9m (FY2016: $55.2m). The auditors are seeking to validate the
full value of this investment in greater detail. This may lead to a
revaluation and a possible partial impairment.
-- SEMHKAT is a copper intangible asset with a carrying value of
$17.9m (FY2016: $17.8m) which may also be subject to revision by
the Group's auditors, Ernst & Young.
-- A review of intercompany loan balances across the Group is
underway and this may lead to other non-cash adjustments within the
Group.
OVERVIEW BY MR DAVID MURANGARI
In view of the dismissal of the Group's previous finance
director, Mr Yim Kwan, and previous chief executive officer, Mr Yat
Hoi Ning, Mr David Murangari, the Group's non-executive chairman,
in conjunction with Toindepi Muganyi, interim chief executive
officer, provide the following commentary and review of
operations:
"Recent events have without question been a major distraction
for the Group and shareholders will understandably be seeking
reassurances about how the Board is managing these matters and
short-term plans.
The action taken has not been easy but was necessary to protect
shareholders' interests and to maintain the long-term
sustainability of the Group's operations and assets. Communities
and those who work for Asa Resource depend on the Group to protect
their livelihoods and the Group has a duty to eradicate anything
that brings the Group or any subsidiary into disrepute.
Shareholders should take some comfort from the urgency of the
directors' actions and the speed with which the board has sought to
restore corporate governance, both within Zimbabwe and across the
Group.
By dismissing the previous executives, we have given control to
local management in Zimbabwe - this has had a very positive effect
upon local management and employees at both BNC and FRGM. Freda
Rebecca and Bindura Nickel are first-class assets with highly
experienced management. Their success is the Group's success.
The promotion of both Toindepi Muganyi and Batirai Manhando is
invaluable as they have unrivalled knowledge of BNC and Freda
Rebecca operations as well as high standing within the Zimbabwean
mining community.
There is no doubt that this last quarter's performance at Freda
Rebecca has been adversely affected by the policies and financial
mismanagement imposed by the previous executives. Demoralisation
amongst the workforces was a clear effect of imposed changes.
However, the rapid reaction to events and a thorough review of
financial controls by Carla Tait at Group level and Jan Lampen at
operational level gives the board confidence that it can manage its
exposure and stabilise its finances.
The board and senior management have wasted no time in coming to
grips with its challenges and has received overwhelming endorsement
for its actions from its employees, partners and connections right
across Zimbabwe.
Given what has occurred lately, I take the opportunity to
comment on these as well as specifics of Q4 (FY2017)
performance.
CORPORATE
Corporate costs have been reducing for some time and whilst
these are very necessary, a more responsible approach will be taken
to ensure quality controls and corporate governance are maintained
to the highest levels. In addition, retaining and motivating the
most experienced workforce is the lifeblood of a successful mining
operation and management has already started reviewing current
resources to ensure previous targets and plans can be
maintained.
An intense review of procurement policies is underway, where
transactional transparency, stock levels, suppliers, quality,
pricing and timing will all be scrutinised very closely.
Decision-making for this vital part of the supply chain must be
left to senior management operating under proper controls, and not
by unqualified staff appointed by executives.
The Group's office in Hong Kong has been closed and staff will
be retrenched. Relevant functions will be absorbed into operations
at Zimbabwe or South Africa. These retrenchments and changes will
further reduce overheads.
The board has already initiated a review of its ancillary
activities including agribusiness and any assets that are not core
to our main mining operations. For example, farming land that is
under our management may be leased out or become part of our
community indigenisation programmes by encouraging miners and other
members of the community to farm it for local benefit.
Group cash has been constrained by the currency restrictions
imposed by the Reserve Bank of Zimbabwe and ongoing issues at Freda
Rebecca. There are a number of outstanding creditors, mainly
relating to legacy litigation, normal corporate expenses and unpaid
directors' fees and salaries. The board has several refinancing
options under consideration and amounts outstanding will be paid in
due course.
In terms of the broader enquiry into alleged mismanagement of
funds, the Board is satisfied that it has established that the
total amount of Group funds unaccounted for does not exceed $4.3m.
Of this amount, $2.7m relates to the year ended 31 March 2016 and
$1.6m to the year ended 31 March 2017. The sum of $1.6m in 2017 has
been traced to two Group companies administered from Hong Kong and
the board is making progress in its investigations. Our auditors,
Ernst & Young, are still investigating a $2.7m transfer in 2015
and is seeking access to all records held in Hong Kong. Should it
transpire that the funds were used for any purpose other than that
they were intended for, the board will aggressively pursue their
recovery and take action against those involved.
Since the launch of this enquiry, it has been especially
encouraging to receive so much support from within Zimbabwe and a
number of approaches to the Group and its subsidiaries have been
received from interested parties either to form joint venture
partnerships, purchase assets, extend loans or offer temporary
financial support, should it be required.
We would ask shareholders to be patient whilst operations are
normalised. We remain optimistic that the previous targets outlined
for Freda Rebecca are achievable over the medium term.
ASA GOLD
Freda Rebecca (Zimbabwe)
While the price of gold increased steadily in Q4 FY2017, major
challenges arose due to low availability of hauling units in
consequence of the mismanagement of Freda Rebecca's working capital
by the previous executives and their appointees. This resulted in
contractors not being paid and staff threatening to strike. The
boards of FRGM and Asa Resource quickly intervened once the extent
of the mismanagement was known. Meetings with the workers council
and key contractors were convened and, after giving reassurances,
staff morale improved quickly and contractors returned to site. We
can confirm that operations are slowly being normalised.
The impact of this was a fall in tonnes milled (down 27%), a 16%
drop in revenues to $15.5m and a 19% decrease in the amount of gold
produced to 12,462 oz. This contributed to C1 and C3 costs also
increasing as a result of lower volumes being processed. Freda
Rebecca senior management expects this trend to be reversed in
coming quarters. Recovery rates were steady with head grade up to
2.04g/t (Q3: 1.78g/t).
The strategy for the mills is also being reversed. Freda Rebecca
has two large and three additional smaller mills acquired within
the group assets with the following annual capacity to process
ore:
Main Plant
Mill (#1) - 600,000/t
Mill (#2) - 600,000/t Total 1.2m/t per annum
CIL Plant 2
Mill (#3) - 300,000/t
Mill (#4) - 300,000/t
Mill (#5) - 300,000/t Total 0.9m/t per annum
Currently Freda Rebecca is operating three smaller mills. The
two larger mills have been working on an intermittent basis for
around 10 months. Mill (#2) is expected to be repaired at a cost of
cUS$1.5 million and fully commissioned by September 2017. For Mill
(#1) to run at full capacity it requires replacement parts - these
have been sourced and are in the process of being delivered from
outside Zimbabwe. This repair and refurbishment has been initiated
by FRGM to reverse the former executives decision of potential
replacement with a mill manufactured in China. The combined total
processing capacity will be 2.1m/t per annum and more than adequate
to match the mine capacity of 1.8m/t per annum. Once mill and mine
capacities are aligned, gold production should increase steadily in
line with the targets indicated previously - 70,000 to 80,000 oz
within six months increasing to over 90,000 oz within a year.
Achieving this full mill capacity is a key objective for the
Group.
All-in-sustaining costs were on a positive downward trend up
until this quarter and, once mill capacity and contractors' issues
are fully addressed, we remain confident of reaching our target of
AISC target of $1,000/oz this year. With a gold price of over
$1,200/oz and higher production, Freda Rebecca's margins and sales
will become more sustainable. It is worth reminding shareholders
that in Q3 last year, Freda Rebecca reported gold production of
18,506/oz with AISC of $988/oz.
Freda Rebecca made an insurance claim following a serious
incident in 2016. It is awaiting a final settlement figure for a
secondary claim to cover business interruption. The final
approximate value is expected to be between US$1 and US$2m and may
take several months to conclude.
Freda Rebecca continues to earn export credits. For the year
ended 31 March 2017 it will have received US$1.3m in cash rebates.
In the next 12 months it is expected that FRGM will earn more than
US$3.6m in cash rebates.
Zindico Consortium lawsuit
The applicants who brought a claim by Zindico Consortium
("Zindico") in January this year failed to present their Heads of
Argument within the prescribed time set by the law. FRGM filed
Heads of Argument in time, which technically means Zindico is
barred from being heard by the court and can no longer file an
answering affidavit. A more detailed explanation of the case is
provided in the Management Report below.
Zani-Kodo JV (Democratic Republic of Congo)
The Group continues to maintain its exploration permits in the
Zani-Kodo and engage regularly with its JV Partner and the DRC's
Ministry of Mines. Licence fees have been brought up to date with
approximately $80,000 due to creditors as at 31 March 2017 - these
sums are in line with the Group's normal level of creditors.
Separately, exploratory talks regarding JV opportunities and
potential funding strategies continue with various entities.
Progress has been delayed in establishing the gravity plant at
Zani-Kodo whilst other operational matters are resolved in DRC.
Detailed information on the Group's concessions has been updated
recently and can be viewed on our new website here:
http://www.asaresourcegroup.com/commodities/asa-gold/zani-kodo
ASA NICKEL
Trojan Nickel Mine (Zimbabwe)
In contrast to Freda Rebecca, the performance of Trojan for Q4
FY17 was encouraging. Most results were ahead of target with higher
nickel production, lower operating costs, strong recoveries and
head grades. The standout achievement was the control of costs: C1
decreased by 20% to US$4,955/t and all-in-sustaining C3 costs by an
impressive 31% to US$4,549/t (Q3 FY17: US$6,554/t). Q4's
performance was in part a result of adjustments to the mine plan,
where more massives and less disseminated ore were mined. As this
plan was not sustainable in the long-term, BNC management is
reverting to its previously accepted plan to maintain a blend of
massive and disseminated ores, which sustains the life of mine.
Over the last few years BNC has outsourced its development which
has not proven as successful as expected. Outside contactors can be
unreliable and often unable to respond to fluctuating equipment
needs. This contract has been terminated and development and
internal haulage will be handled internally.
BNC is also currently reassessing its business plan: review of
equipment, mineral resources, systems and structures with a view to
improving their overall performance in the new financial year. The
focus will be on increasing equipment uptime, asset utilisation,
productivity targets and cost controls.
Since March 2017, the price of nickel has dropped on the back of
news from the Philippines and Indonesia that their respective
governments may be softening their stance on the curtailment of
shipments of unprocessed ore. It is a reasonable expectation that
the nickel price may remain range-bound for the next few quarters.
Given this lower price environment, BNC will need to keep their
operating costs (C3) around or below US$5,000/t.
Re-deepening project
Since the decision to progress the final phase of the
re-deepening project was taken in December 2016, progress has
continued. It is costing approximately $5m to complete and will
extend the shaft system by 240m from 37/0 to 45/0 level. While this
project is on-going, management is exploring ways to mitigate its
impact on production. On completion, it would extend the life of
the mine by about 5 years and allow access to drill for ore
reserves beyond 45/0 level and potentially provide higher grades in
advance of the smelter restart. There is a more detailed progress
update at the end of this announcement.
Smelter Restart Project
The pace of progress has been carefully managed to prioritise
cash flow requirements. It is currently 82% complete. It is
important to emphasise that the long-term strategic and economic
value of the smelter is when the nickel price is more elevated than
it is at present (the original plan worked on a nickel price of
$16,250/t). Operation of the smelter will require significant,
additional, costly power supplies and the overall operating cost
has a major bearing upon it coming into operation. BNC negotiated a
12-month moratorium on the principal of its bond repayments - these
will be paid quarterly from September 2017 and a sinking fund to
provide for them is in place. Bondholders have been kept up to date
on developments in relation to the smelter programme.
In the meantime, BNC continues to explore conversations with
third party nickel producers in the region. As the price of nickel
recovers, more concentrate will come to the market and an off-take
agreement with another producer would be positive for the economics
of our smelter.
There is a detailed update at the end of this announcement.
ASA DIAMONDS
Klipspringer (South Africa)
The tailings retreatment programme has been in transition. In
January 2017, Gemcore (JV partner) commenced a 3-year coarse
tailings programme on Marsfontein coarse tailings. When De Beers
operated the mine in the late 90s, Marsfontein was one of the
highest-grade diamond mines in the world. The tailings area is
extensive and, while the bulk sampling results were encouraging,
there have been issues in locating those parts of the tailings dump
that match the sampling tests.
However, while results have been more encouraging recently,
continuing quality issues cannot be ruled out.
The Group reported previously that it is seeking opportunities
to introduce a new BEE JV partner to re-start Klipspringer's
underground mine operation. Discussions with potential operators
are ongoing.
ASA COPPER
As part of the Board's review, it is seeking full and detailed
clarification on all of its JV partnerships including those held
with Hailiang. There is little to add until this process has been
completed. Further information is available on our website
AGRIBUSINESS
The Group's agribusiness assets are under review and we will
update the market in due course.
MANAGEMENT REPORTS
ASA Gold - Freda Rebecca Gold (Zimbabwe)
Quarter Quarter Quarter Quarter
ended March ended Dec ended Sept ended June
2017 2016 2016 2016
------------------ ------ ------------ ---------- ----------- -----------
Tonnes mined t 293,705 311,349 363,082 321,630
------------------ ------ ------------ ---------- ----------- -----------
Tonnes milled t 231,739 319,026 262,633 274,474
------------------ ------ ------------ ---------- ----------- -----------
Head grade g/t 2.04 1.78 2.28 1.96
------------------ ------ ------------ ---------- ----------- -----------
Recovery % 83 83 84 83
------------------ ------ ------------ ---------- ----------- -----------
Gold sales oz 12,462 15,365 15,904 14,463
------------------ ------ ------------ ---------- ----------- -----------
Average gold
price received US$/oz 1,241 1,195 1,341 1,275
------------------ ------ ------------ ---------- ----------- -----------
Cash cost
(C1) US$/oz 1,113 956 944 993
------------------ ------ ------------ ---------- ----------- -----------
All-in sustaining
cost (C3) US$/oz 1,291 1,055 1,115 1,153
------------------ ------ ------------ ---------- ----------- -----------
Figures shown are unaudited and may vary upon final audit.
1. C1 cash cost includes costs for mining, processing,
administration, accounting movements for stockpiles and
gold-in-circuit, and net proceeds from by-product credits. C1 costs
exclude capital costs for exploration, mine development or
processing mill capital works and royalties.
2. C3 (all-in sustaining) costs reflects C1 costs plus
depreciation and amortisation, thus incorporating the capital cost
of production plus interest, other indirect costs and royalties.
All-in sustaining costs represent all costs attributable to gold
production over the period.
Management comments - Freda Rebecca
Management offers additional comments on their operation
performance:
-- Gold production decreased by 19% in Q4 FY2017 to 12,462 oz
compared to 15,365oz in the previous quarter. The decrease in
production was mainly attributed to a 27% decrease in tonnes
milled.
-- Tonnes mined for the quarter under review decreased by 6% to
293,705t from 311,349t in Q3 FY2017. The major challenge was low
availability of hauling units driven by working capital challenges
experienced by outsourced contractors, a direct result of FRGM cash
flow mismanagement.
-- Tonnes milled decreased by 27% to 231,739t in Q4 FY2017 (Q3
FY2017 - 319,026t) due to extended breakdown of Mills 1 and 2.
-- The feed grade for Q4 FY2017 increased by 15% to 2.04g/t from
1.78g/t in Q3 FY2017. The increase is due to the introduction of 15
new stopes that have increased confidence level.
-- Q4 FY2017 C1 Cash cost increased by 16% to $1,113/oz (Q3
FY2017 US$956/oz) - as a result of a 19% decrease in gold
production. Consequently, all-in sustaining costs realised an
increase of 22% from $1,055/oz in Q3 FY2017 to $1,291/oz.
Zindico Consortium lawsuit - detailed update
After service of summons by Zindico (or the "Applicant"), FRGM
filed a notice to defend and served on their lawyers of record.
FRGM also applied through the court for further particulars and
details about the claim including: the identities of the members of
the consortium, a signed copy of the alleged agreement to enable
FRGM to know the nature of the claim and place it in a position to
know what it was responding to. Zindico failed to respond within
the prescribed time set by the law. FRGM then engaged and
instructed Advocate Mpofu, through its lawyers of record, to file
Heads of Argument and these were duly issued out of the High Court
and served on the Applicant's legal practitioners. Once FRGM had
filed its Heads of Argument, Zindico is technically barred from
being heard by the court.
Since FRGM has filed Heads of Argument, the Applicant can no
longer file an Answering affidavit and the Applicant must seek
specific leave of the court in order to do so. Alternatively, they
must withdraw the matter, tender costs and file a fresh application
for that purpose. Zindico has not taken either of these
actions.
On 10 March 2017, Zindico through its lawyers wrote to our
lawyers requesting FRGM to lift the bar in the matter so that they
can file their Heads of Argument. FRGM has refused to accede to
this request on the grounds that Zindico does not seem to be
serious about prosecuting the matter and its claims that they did
not know that some of the defendants were not based in Zimbabwe,
have no merit.
Neither Asa Resource nor FRGM have any record that the lawyers
for Zindico have carried out their intended action of serving
papers on the foreign-based respondents (Asa Resource and other
subsidiary companies) in this matter. FRGM has not seen any
evidence of action on their part following their last letter of the
10 March 2017. FRGM reasonably believes there is no intention to
prosecute the matter further.
As it stands, FRGM's next steps is to have the High Court
dispose of the matter by dismissing the Zindico claim with punitive
costs and has instructed their lawyers to file an application for
dismissal of the matter.
Asa Resource has considered the basis of the claim and is
satisfied that the conditions precedent to the alleged agreement,
including approval by the board of directors of Asa Resource, were
never met and that the claim has neither foundation nor merit.
Asa Nickel - BNC Trojan Nickel Mine (Zimbabwe)
Trojan Mine Quarter Quarter Quarter Quarter
ended ended ended ended
------------------- -------
Mar-17 Dec-16 Sep-16 Jun-16
------------------- ------- -------- -------- -------- --------
Tonnes mined t 107,604 123,532 104,018 97,689
------------------- ------- -------- -------- -------- --------
Tonnes milled t 112,608 122,721 103,857 101,433
------------------- ------- -------- -------- -------- --------
Head grade % 1.684 1.495 2.016 1.760
------------------- ------- -------- -------- -------- --------
Recovery % 89.2 85.6 89.1 87
------------------- ------- -------- -------- -------- --------
Ni in concentrate t 1,771 1,571 1,866 1,555
------------------- ------- -------- -------- -------- --------
Nickel sales t 1,631 1,610 1,971 1,493
------------------- ------- -------- -------- -------- --------
Average nickel
price US$/t 6,675 7,004 6,668 5,728
------------------- ------- -------- -------- -------- --------
Cash cost
(C1) US$/t 4,955 6,159 4,782 5,736
------------------- ------- -------- -------- -------- --------
All-in sustaining
cost (C3) US$/t 4,549 6,554 5,151 6,489
------------------- ------- -------- -------- -------- --------
Figures shown are unaudited and may vary upon final audit.
1. C1 cash cost per tonne includes costs for mining, processing,
administration, off-take costs and penalties, transport costs,
accounting movements for stockpiles, and net proceeds from
by-product credits. It excludes capital costs for exploration, mine
development or processing mill capital works, and, the cost of
royalties.
2. All-in sustaining C3 cost reflects the cash cost per tonne
plus depreciation and amortisation, thus incorporating the capital
cost of production, plus interest, other indirect costs and
royalties. All-in-sustaining cost represents all costs attributable
to nickel production over the period
3. The company has amended the reporting of the nickel price
received, cash cost and all-in sustaining cost. The average nickel
price received reflects the actual price received rather than the
actual average price for the quarter as previously reported. Cash
costs and all-in sustaining costs are now reported as actual costs
incurred, previously these costs were adjusted for the opportunity
cost forgone as a result of selling a nickel concentrate rather
than a nickel cathode.
Management comments - BNC
Management offers additional comments on their operation
performance:
-- Mined tonnage was 13% below the previous quarter at 107,604t
(Q3 FY2017: 123,532t). Hoisting decreased for the fourth quarter
due to adjustments to the mine plan where focus was to mine more
massives and reduce disseminated ore. Mining constraints for the
fourth quarter include lagging development and low availability of
dump trucks.
-- The outsourced development contract was terminated and
development is now being carried out internally. The mine is
currently reviewing the business plan that includes the state of
equipment, mineral resources, systems and structures with a view to
improving performance in the new financial year. The focus is on
increasing equipment uptime and asset utilisation to increase
productivity and cost effectiveness.
-- C1 cash costs for nickel-in-concentrate decreased by 20% to
US$4,955/t (Q3 FY2017: US$6,159/t)
-- All-in sustaining C3 costs of nickel-in-concentrate decreased
by 31% to US$4,549/t (Q3 FY2017: US$6,554/t). The decrease in C1
and C3 costs is attributable to an increase in production achieved
and cost control measures.
Re-deepening project - detailed update
The Re-deepening project critical path is now on the Subvertical
Rock winder upgrade that requires at least 8 months for design,
procurement, manufacture and delivery of spares to site. The impact
of non-availability of Re-deepening for the financial year will be
mitigated by continued use of Service Winze infrastructure for
hoisting of massives ore and handling of waste from 41 Level and 43
or 45 Level haulages. It is envisaged that the tie-in will complete
by Q1 FY2018/19 (e.g. March 2018).
Cost
BNC has spent $13.9m million of the $18.9m authorised amount.
$1m has been spent since the restart in September 2016 and $4.5m is
available to spend with the supplementary $5.2m of the authorised
headroom. The winder brakes and controls system upgrade total costs
are being firmed up with original equipment suppliers. Loading
station civils has been done internally to reduce cost and the
strategy will be to utilise internal labour as far as possible
whilst focusing on the critical path time frame that is the winder
upgrade.
SHEQ
The project has gone for twenty months accident free, the last
fatality was in 2015.
Activity update
The project is 32% complete and activities that require minimum
funding are in progress:
1. Loading Station civils are 80% complete. Activity was slowed
down to allow Crusher civils to be completed by the contractor, as
material movement became a constraint. Most steelwork is on site
now and payment of design engineers will be made to allow the
remaining commissioning equipment to be delivered ahead of tie-in
shutdown.
2. Crusher chamber civils was completed in April 2017 and
installation of steel work is now in progress targeted for
completion in September 2017. Internal labour will be utilised to
reduce cost. After completion, the crusher will be commissioned
using massives ore to be hoisted via 45Level using kibbles.
3. Decommissioning of service shaft that is the waste pass will
be finished during tie-in shutdown to allow use of hoisting
infrastructure to support the production plan to hoist massives ore
on 39 Level and reduce dump truck tramming distances.
4. Other activities that are in progress include: drilling of
dewatering drain holes; de-watering pipeline commissioning and
installations of switchgear on 39 and 44 Level substations.
5. Major milestones still outstanding include:
-- Firming up of a Subvertical Rock winder controls upgrade
supplier with a focus to utilise Schneider who commissioned the
Service and Main Rock Winder successfully in 2015. Mining of 46/0
Level shaft 3 metres overrun, 10 metres lateral overrun and
installation of spillage handling facility will be done at a slower
pace to allow use of hoist for production.
Smelter Project - detailed update
The Smelter Restart Project is progressing well and is currently
82% complete. Much of the refurbishment work and installation of
new equipment has been done.
Major work has been completed and some equipment has been cold
commissioned. However, there has been a delay in completing some of
the planned work due to cashflow constraints and nickel prices.
The major highlights of the progress in various sections of the
project are:
1. Concentrates Handling Plant: The modified dryer drum and the
new hot air furnace were successfully cold commissioned. The
conveyance system refurbishment is in progress and awaiting drive
system ancillaries. The major outstanding work in this section is
installation of conveyor belts and plant control system.
2. Crushing and Screening Plant: The crushing plant was hot
commissioned and is running well. The screening plant refurbishment
is still in progress and now awaiting delivery and installation of
drive system ancillaries before plant commissioning.
3. Cooling Water System: Installation of the two new BSR cooling
towers was completed and the section is currently undergoing cold
commissioning.
4. 4Blower House: A new compressor and a cooling tower were
installed and commissioned. The spares for the three HEH blowers
were sent to South Africa and are now awaiting repair
quotations.
5. Electrostatic Precipitator (ESP) Refurbishment: Installation
of the three new ID fans, ESP outlet and inlets cones, dust
conveyance system and all ductings were completed. The ESP and
mixing chamber roofs were also repaired.
6. Converters: The first converter shell and all its drives and
a new 30t crane were installed. The second converter shell and its
drives are still to be delivered. Refurbishment of the old 30T
crane is still outstanding because the required components are
still to be procured and delivered due to cashflow constraints. The
punching machines are being manufactured in South Africa and
expected for completion by end of May 2017. The new pumps and pipes
for matte granulation were installed and now awaiting cold
commissioning.
7. Furnace: Furnace refractory rebuilding was completed while
the cold commissioning of the new feed system is awaiting delivery
of drive motors. Refurbishment of the electrode and cooling water
systems and installation of the off gas ducting are currently in
progress. The new pumps and pipes for slag granulation were
installed and now awaiting cold commissioning.
8. Civil Work and Structural Refurbishment: The major civil and
structural refurbishment works were completed and plant painting is
in progress.
Planning
Refurbishment work is continuing at a slower pace utilising the
already received equipment and materials. Major equipment and
materials will be funded as and when funds become available from
the Trojan Mine production. The commissioned equipment will
continue to run on a periodic basis to ensure that it remains in
good state until the whole plant is fully commissioned.
Asa Diamonds - Klipspringer Diamond Mine (South Africa)
* Quarter ** Quarter Quarter Quarter
Mar 2017 Dec 2016 Sept 2016 June 2016
------------------- ----------
Tonnes treated t 42,024 41,485 47,873 52,403
------------------- ---------- ---------- ----------- ------------ ------------
Head grade cpht 3 34 50 59
------------------- ---------- ---------- ----------- ------------ ------------
Recovery % 0.99 1.37 1.52 0.97
------------------- ---------- ---------- ----------- ------------ ------------
ROM diamonds
recovered carats 1,274 14,016 23,832 30,888
------------------- ---------- ---------- ----------- ------------ ------------
Diamond sales carats 785 19,170 36,131 29,921
------------------- ---------- ---------- ----------- ------------ ------------
Average diamond
production
cost US$/ct 73.41 26.57 13.13 10.91
------------------- ---------- ---------- ----------- ------------ ------------
Average diamond
price US$/ct 32.86 17.91 18.42 20.35
------------------- ---------- ---------- ----------- ------------ ------------
*Quarter ended Dec 2016 saw the end of the slimes project.
**Quarter ended Mar 2017 was the commissioning and start of the
coarse project.
Ratio of Run of Mine (ROM) diamonds delivered to diamonds in
stock (DIS) after sieving, cleaning and sorting.
Figures shown are unaudited and may vary upon final audit.
The slimes project ended in November 2016 and was replaced with
the coarse dump project that first produced in February 2017. The
diamonds recovered and grade will drop in the coarse project, but
the $ per carat increases.
Management comments - Klipspringer
The coarse tailings production commenced in January 2017. For
the first 3 months the project did not achieve the expected sample
grade and averaged 3 cpht instead of 6 cpht.
Gemcore have made many metallurgical changes and also audited
the plant and recovery tailings in order to find out why sampled
grade was not achieved. They also changed the mining sites and are
carrying out further analysis on the dump."
Contact
For more information http://www.asaresourcegroup.com/ or contact
us below.
Asa Resource Group plc
One Fleet Place, London EC4M 7WS
Ian B Dearing, Executive Director, Group General Counsel and
Company Secretary
Niall Henry, non-executive Director (Investor Relations)
communications@asaresourcegroup.com
Nominated Adviser and Broker
SP Angel Corporate Finance LLP
Prince Frederick House, 35-39 Maddox Street, London W1S 2PP
John Mackay, Jeff Keating, Caroline Rowe
Tel: +44 (0) 20 3470 0470
-------------------------------------------------------------------------------------------------------------------------------------------------------------------
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Cautionary statement
This Quarterly Update has been prepared solely to provide
additional information to enable shareholders to assess the Group's
strategy and business objectives and the potential for them to be
fulfilled. It should not be relied upon by any other party or for
any other purpose. This Quarterly Update contains certain
forward-looking statements and has been made by the Directors in
good faith based on information available to them at the time of
their approval of this update. These statements should therefore be
treated with caution due to the inherent uncertainties, including
both economic and business risk factors, underlying such
forward-looking information.
This information is provided by RNS
The company news service from the London Stock Exchange
END
UPDDMGMKKRRGNZM
(END) Dow Jones Newswires
May 19, 2017 02:00 ET (06:00 GMT)
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