Amara Mining Regulatory News (AMA)

28 August 2014 AIM: AMA

Amara Mining plc("Amara" or "the Company")

H1/Q2 2014 RESULTS

Amara Mining plc, the AIM-listed West African-focused gold mining company, is pleased to announce an update for the half year ("H1 2014") and quarter ended 30 June 2014 ("Q2 2014").

Q2 2014 HIGHLIGHTS

Yaoure Gold Project

· On track to deliver two Mineral Resource updates in H2 2014 and a Pre-Feasibility Study ("PFS") for Yaoure in Q1 2015

· 80,000 metre drilling campaign is underway at Yaoure Gold Project ("Yaoure"), following delivery of compelling Preliminary Economic Assessment ("PEA") in Q1 2014 and US$30.5 million placing and open offer

· Results of first 70 diamond drill ("DD") holes at Yaoure received - targeting of 'information gaps' in Yaoure Central zone confirms presence of mineralisation, with a significant proportion of waste expected to be converted to mineralised material

· Results of first 35 reverse circulation ("RC") holes at Yaoure received, confirming high grade nature and strong continuity of CMA zone

Other Assets and Corporate Highlights

· Low-cost optimisation work continues at Baomahun Gold Project ("Baomahun")

· Mining has ceased at Kalsaka/Sega Gold Mine ("Kalsaka/Sega") following the Directors' decision to put the operation into liquidation - does not represent a material change to the Company's strategy for Kalsaka/Sega

· John McGloin appointed as Chief Executive Officer following Peter Spivey's resignation

· None of Amara's assets are affected by the Ebola virus

H1 2014 OPERATIONAL AND FINANCIAL HIGHLIGHTS

· Production of 31,030 ounces at Kalsaka/Sega in H1 2014

· Cash and liquid assets of US$28.6 million as at 30 June 2014

· Cash includes US$3.4 million bond to provide for the rehabilitation of the Kalsaka/Sega site and to facilitate the efficient closure of the operation - Amara will not invest any further cash into its operating subsidiaries in Burkina Faso

· All cash assigned to the delivery of a Pre-Feasibility Study for Yaoure remains committed to this aim - the cessation of mining will not materially affect Amara's financial position

John McGloin, Chairman and Chief Executive Officer of Amara, commented:

"The first half of 2014 has been a transformational period for Amara, with Yaoure now recognised as one of the most exciting gold development projects in West Africa and the Company fully-funded to deliver a PFS in Q1 2015. The results of the 80,000 metre drilling campaign continue to increase our confidence in the deposit and I look forward to completing two Mineral Resource updates in H2 2014. While mining at Kalsaka/Sega has now been completed, the value within Amara remains intact and we are well-positioned to deliver strong value for our shareholders as we continue to advance Yaoure along the development pipeline."

Management Conference Call

The management team of Amara will host a meeting for analysts and investors today at the offices of K&L Gates, One New Change, London, EC4M 9AF at 9:30am UK time. There will be a simultaneous conference call and dial-in details are as follows:

Dial in number (UK toll free) 0808 237 0030

Alternative dial in number: +44 (0)20 3139 4830

Participant PIN Code: 14962784#

A presentation to accompany the conference call is available at www.amaramining.com and playback of the conference call will be available at http://www.amaramining.com/Investor-Relations/Webcasts shortly after the conclusion of the call.

OPERATIONAL REVIEW

This announcement is intended to be read in conjunction with the Q1 2014 update, dated 19 May 2014.

Yaoure Gold Project, Côte d'Ivoire

Yaoure is the largest gold deposit in Côte d'Ivoire, with a 6.3 million ounce Mineral Resource (20.3Mt at 1.20g/t for 780 ounces Indicated and 133.0Mt at 1.29g/t for 5,518 ounces Inferred). Amara delivered a PEA for the project in Q1 2014[i], which demonstrated that it has the potential to be one of the top 10 gold mines in Africa by production[ii]. It also showed that Yaoure generates compelling economic returns, with total cash costs amongst the five lowest cost gold mines in Africa[iii], due mainly to nearby existing high quality infrastructure.

Following the announcement of the PEA, Amara completed a placing and open offer which raised US$30.5 million[iv]. The majority of these funds have been committed to advancing Yaoure and the Company is fully funded to deliver a PFS for the project in Q1 2015.

As part of the work towards the PFS, an 80,000 metre drilling programme commenced in April 2014. With the programme ramping up to include nine DD rigs and one RC rig, currently Amara believes that it is undertaking the largest drilling programme in Africa.

Drilling programme

As of 08 August 2014, 104 DD holes had been completed and nine are in progress for a total advance of 27,950 metres since 2 May 2014, out of 57,000 metres budgeted for the total DD programme. The first phase of RC drilling, which comprised 26 RC holes (5,763 metres), was completed on 17 May 2014, focusing on the higher grade CMA zone. The second phase commenced on 26 June 2014 and continues to focus on the CMA zone, with a total advance by 08 August 2014 of 10,543 metres, out of 23,000 metres budgeted for the total RC programme.  Results returned by 08 August 2014 for 70 DD holes and 35 RC holes will be used to compile the first of the two Mineral Resource updates in H2 2014.

The results to date from the Yaoure Central zone confirm that there is ore below the existing pit, which had not previously been drilled due to lack of access caused by water in the pits (the pit has now been de-watered). This increases Amara's confidence in its ability to expand Yaoure's National Instrument ("NI") 43-101 compliant 6.3 million ounce Mineral Resource. The conversion of waste to mineralised material is also expected to have a positive impact on the project's strip ratio (currently 5.2:1 in the headline 8Mtpa scenario).

Significant intercepts from DD holes in the Yaoure Central zone:

Notes

1. Interval lengths are not true widths. Composite intersections are based on a minimum width of 2m and a cut-off of 0.40 g/t Au. Internal dilution of up to 2.00m at less than 0.40 g/t has been allowed for continuity

2. Steep cross-cutting shear zone with alteration and quartz veining

3. Aggregated composite intersection in which internal dilution of 3m at less than 0.4 g/t has been allowed for continuity

The results to date from the CMA zone confirm the continuity and high grade nature of the CMA zone, increasing Amara's confidence in the economics of the deposit.

Significant intercepts from DD and RC holes into the high grade CMA zone:

Notes

1. Interval lengths are not true widths. Composite intersections are based on a minimum width of 2m and a cut-off of 0.40 g/t Au. Internal dilution of up to 2.00m at less than 0.40 g/t has been allowed for continuity

2. Steep cross-cutting quartz vein

In conjunction with this programme, Amara conducted a statistical exercise over a limited strike length of the CMA zone (200m) to compare the resource estimates generated by the previously drilled 100m spaced holes (only DD) with the newly drilled 50m spaced holes (initial DD and in-fill RC). The higher density drilling compared favourably to the previous drilling, confirming the continuity of the high grade areas and increasing the gold content.

Mineral Resource Updates

Amara is on track to deliver two Mineral Resource updates for Yaoure in H2 2014. The first update is expected to increase the current 6.3 million ounces and is anticipated to be released in September 2014. The second update is expected to upgrade the majority of the Inferred resources to the Indicated category, increasing Amara's confidence in the deposit.

Pre-Feasibility Study update

Following the two Mineral Resource updates, the Company expects to complete a PFS for Yaoure in Q1 2015 and Nigel Tamlyn has been appointed to manage its delivery.

As a graduate of the Camborne School of Mines and the University of the Witwatersand, Nigel is a mining engineer with over 30 years' experience in the construction and operation of mining projects. His work has spanned a variety of commodities, including gold, in West, South and East Africa, Australia, North America, Russia and Europe.

Most recently he held the position of Chief Operating Officer and Technical Director for TSX-listed La Mancha Resources, where he supervised the delivery of a number of NI 43-101 compliant technical reports, including Feasibility Studies for a US$187 million 3Mtpa carbon-in-leach plant and a US$250 million 5Mtpa flotation plant for the Hassai Gold Mine in Sudan. Prior to that, he was General Manager of TSX-listed Golden Star Resources' Bogoso Prestea mine in Ghana for three years.

At present, Nigel is focused on progressing the Environmental and Social Impact Assessment, along with Amara's external consultants, and overseeing the latest phase of metallurgical test work. Amara expects to announce results of the metallurgical test work in Q4 2014. In additional, SRK Consulting UK ("SRK") is evaluating opportunities to optimise a number of key areas outlined in the PEA. These include the site layout and equipment optimisation.

Baomahun Gold Project, Sierra Leone

Baomahun is a high grade, Archean-age gold deposit in central Sierra Leone. It provides a second strong growth opportunity for Amara and following the delivery of the Feasibility Study ("FS") in Q2 2013, Amara began a process of optimisation work. The first phase of results was announced in Q1 2014.

This work focused on 'right-sizing' the plant to the deposit to reflect the current market conditions and the outlook for the gold price. Based upon a smaller 1Mtpa scenario, the upfront capital cost is reduced by 40% to US$90 million and the total pre-production capital cost is reduced by 43% to US$143 million compared to the Baomahun FS. In an open pit only scenario, Baomahun's metrics are comparable with other similar gold projects in West Africa, although Baomahun's forecast returns strengthen significantly when an underground component to the project is introduced. Low cost work continues exploring the optimisation opportunities for Baomahun.

In Q2 2014 low-cost exploration work continued at the project, including the re-logging of core samples and a focused soil sampling programme carried out by employees from the local area. However, since the outbreak of the Ebola virus in Sierra Leone activities have been restricted and enhanced hygiene requirements have been put in place. Amara is also working with the local community to improve hygiene awareness. To date there have been no reported Ebola cases in the vicinity of Baomahun.

Discussions regarding the fiscal stability agreement for Baomahun have been continuing with the Sierra Leone government. Amara is cautiously optimistic that the terms will be competitive.

Kalsaka/Sega Gold Mine, Burkina Faso

Cessation of Mining

On 05 August 2014 Amara announced that mining had ceased at its Kalsaka/Sega gold mine in Burkina Faso and the Directors had decided to put one of its local subsidiaries into liquidation. It followed the receipt of a default notice to its local subsidiary in Burkina Faso, Seguénéga Mining SA ("SMSA"), from BCM International, the mining contractor at Kalsaka/Sega.

As previously announced, Amara was due to begin the closure of its two subsidiaries in Burkina Faso in Q4 2014, ahead of the scheduled cessation of production in Q1 2015, so while the default notice accelerated this event, it did not represent a material change to the Company's strategy for Kalsaka/Sega.

The decision to commence liquidation in Burkina Faso was taken to protect employees and all creditors, including Amara and its other subsidiary Kalsaka Mining SA ("KMSA"), collectively SMSA's largest creditors. The Kalsaka/Sega site has been placed on care and maintenance pending the appointment of the liquidator, with leaching activities ongoing. Operations are expected to ramp up again once a liquidator has been appointed in order to allow the remaining stockpiles of ore to be processed and the remaining gold within the heaps to be released, providing funds for the repayment of creditors.

Amara remains in control of KMSA, which owns the Kalsaka processing plant, and the Directors are confident that sufficient cash can be recovered from the liquidation process to pay all of KMSA's creditors in full. Amara is looking for opportunities to realise the value of the plant and operational team, which represents an upside opportunity for the Company.

Production Highlights

As reported in the Q1 2014 update, the first quarter was a strong period for Kalsaka/Sega with production of 16,263 ounces as the high grade material mined at Sega in Q4 2013 was realised. However as also stated, the head grade mined in Q1 2014 was below expectations and due to the heap leach cycle, these lower grade ounces affected production (9% decrease compared to Q1 2014 to 14,767 ounces) and operating costs (25% increase in total cash costs to US$1,296 per ounce) in Q2 2014.

Total cash costs, including royalties, in Q2 2014 were US$1,455 per ounce, significantly above the average realised gold price, and at EBITDA level, Kalsaka/Sega made a loss of US$2.4 million. Kalsaka/Sega's performance began to improve in July 2014 as higher grade areas of the Sega deposit were accessed, meaning that higher grade material is available for processing once these operations re-start.

Amara made a commitment to its shareholders that funds raised in the recent placing would be applied to delivering value from Yaoure, rather than supporting on-going production at Kalsaka/Sega. With the underperformance of some key areas of the ore body in Q2 2014, the mine plan was re-configured to reduce the size of some key pits such that mining was due to be completed in late August. This would have meant that stacking of the stockpiled ore was expected to continue until late September 2014 and gold recovery was expected to continue until Q1 2015. Following the decision to close Kalsaka/Sega, Amara has no obligations to provide further funds into Burkina Faso to manage the closure of the Kalsaka/Sega mine. A US$3.4 million cash bond is available in Burkina Faso to provide for the rehabilitation of the Kalsaka/Sega site and facilitate the efficient closure of the operation.

Although H1 2014 production achieved the run rate needed to meet full year production guidance, the imminent liquidation of SMSA and the loss of control that entails results in the full year guidance of 60,000-70,000 ounces no longer being valid.

Liberia

Amara has taken the decision to enter into an agreement to dispose of its assets in Liberia, which include three exploration licences (Cestos, Kle Kle and Zwedru), and Amlib Drilling Services Liberia. The management team expect to receive cash consideration for the licences and other in-country assets approximating book value. Exploration activity at Yaoure and Baomahun is expected to generate stronger value for shareholders and thus Amara is focusing its cash and management attention on these projects.

Corporate

Directorate changes

John McGloin was appointed as Chief Executive Officer, following Peter Spivey's resignation, and he will also retain the position of Chairman. As Amara's primary focus is the development of Yaoure, the Board is confident that John is the right person to lead the Company through its next phase of growth. Since joining the Company, he has led the advancement of Yaoure and re-focused Amara's exploration programme on Côte d'Ivoire. This has resulted in a 25-fold increase in the project's Mineral Resources from 249,000 ounces to 6.3 million ounces and a PEA that demonstrates Yaoure's compelling economics.

Financial Report

Group Financial Highlights

Due to the treatment of Kalsaka/Sega as a discontinued operation at 30 June 2014, the presentation of the income statement is significantly altered compared to the year-ended 31 December 2013. With all of the Group's revenue effectively discontinued and the investment at Yaoure and Baomahun capitalised as an intangible fixed asset, the income statement reflects only the ongoing general and administrative ("G&A") costs for the group as a whole together with the costs incurred in Liberia, which were discontinued after the period end. The analysis of revenue and EBITDA set out above reflects the position of the entire group.

Losses of US$7.6 million from discontinued operations represent a modest EBITDA profit of US$1.1 million and a high depreciation charge for the period as noted in Q1 2014. As set out in the notes to the H1 2014 accounts, the net assets of the discontinued operations sum to zero on the consolidated balance sheet although significant debts are due from the Burkina Faso subsidiaries to Amara, which may be recovered in part through the closure process.

Following the directorate and other staff changes as a result of the decision to cease mining activities, further savings will be realised in the G&A costs for the Group, which totalled US$3.5 million in the half year. Amara is committed to ensuring that the maximum investment is made in our exploration and development properties from our cash resources to realise value for shareholders.

Following the decision to close the Burkina subsidiaries, the continuing group balance sheet remains strong, with US$23.7 million of unrestricted cash at 30 June 2014. The Group's borrowings, which were raised from Samsung to invest into the Sega property, have been fully repaid in August 2014 and there are no other long term liabilities.

Exploration expenditure at Yaoure in H1 2014 totalled US$4.4 million as the major drilling campaign got underway. A significantly higher investment is expected in H2 2014 as the drilling programme is completed, allowing two Mineral Resource updates to be announced in H2 2014 as the basis for the PFS due in Q1 2015.

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About Amara Mining plc

Amara is a gold explorer/developer with assets in West Africa. The Company is focused on unlocking the value in its development projects. At Yaoure in Côte d'Ivoire, this will be done by increasing the confidence in the existing Mineral Resource and economics at the project as the Company progresses it through to Pre-Feasibility Study and Bankable Feasibility Study. At Baomahun, this will be achieved by gaining an improved understanding of the exploration upside potential and underground opportunity. With its experience of bringing new mines into production, Amara aims to further increase its production profile with highly prospective opportunities across both assets.

Non IFRS Measures - EBITDA (Earnings Before Interest, Income Taxes, Depreciation and Amortization), cash cost per ounce and average realised gold price are financial measures used by many investors to compare mining companies on the basis of operating results, asset value and the ability to incur and service debt. EBITDA is used because Amara's net income alone does not give an accurate picture of its cash generating potential. Management believes that EBITDA is an important measure in evaluating the Company's financial performance, ability to fund future capital expenditures and repay any future project financing, and in determining whether to invest in Amara. Similarly, cash cost per ounce and average realised gold price are measures that are considered key measures by Amara in evaluating the Company's operating performance. However, EBITDA, cash cost per ounce and average realised gold price are not measures of financial performance, nor do they have a standardized meaning prescribed by IFRS, and may not be comparable to similar measures presented by other companies. Investors are cautioned that EBITDA should not be construed as an alternative to net income or loss determined in accordance with IFRS as an indicator of Amara's performance or to cash flows from operating, investing and financing activities of liquidity and cash flows. These measures have been described and presented in this document in order to provide shareholders and potential investors with additional information regarding the Company's operational performance, liquidity and its ability generate funds to finance its operations.

Peter Brown is a "Qualified Person" within the definition of National Instrument 43-101 and has verified the data disclosed in this release, including sampling, analytical and test data underlying the information contained herein, and reviewed and approved the information contained within this announcement. Dr Brown (MIMMM) is the Group Exploration Manager.

AMARA MINING plc

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2014 and 2013

There were no other comprehensive income gains or losses during the periods presented.AMARA MINING plc

CONDENSED consolidated statement of financial position

As at 30 June 2014 and 31 December 2013

AMARA MINING plc

CONDENSED consolidated statement of changes in equity

For the six months ended 30 June 2014 and 2013 and 31 December 2013

Amara Mining plc

CONDENSED consolidated statement of cash flows

For the six months ended 30 June 2014 and 2013

Cash flows from discontinued operations have been presented in note 7.

Included in cash and cash equivalents is US$3,364,000 (2013: US$3,126,000) in respect of a restricted bank account held for the purposes of the rehabilitation of the Kalsaka mine site in Burkina Faso. This balance forms part of the discontinued operations cash and cash equivalent total disclosed in note 7.

AMARA MINING plc

notes to the interim financial information

For the six months ended 30 June 2014 and 2013

1. Basis of preparation

The condensed interim financial information has been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and implemented in the UK. The accounting policies, methods of computation and presentation used in the preparation of the interim financial information are the same as those used in the Group's audited financial statements for the year ended 31 December 2013, which this interim consolidated financial information should be read in conjunction with. The financial information has been prepared in accordance with International Accounting Standard 34 - Interim Financial Reporting.

The financial information in this statement does not constitute full statutory accounts within the meaning of Section 434 of the Companies Act 2006. The financial information for the six months ended 30 June 2014 and 30 June 2013 is unaudited, and has not been reviewed by the auditors.

The financial information for the year ended 31 December 2013 has been derived from the Group's audited financial statements for the period as filed with the Registrar of Companies. It does not constitute the financial statements for that period. The auditor's report on the statutory financial statements for the year ended 31 December 2013 was unqualified and did not contain any statement under sections 498 (2) or (3) of the Companies Act 2006.

Going Concern

Following the cessation of mining operations at the Kalsaka/Sega gold project in Burkina Faso, the Directors carried out a detailed review of the Group's financial position and cash flow forecasts in respect of its remaining operations in Cote d'Ivoire, Sierra Leone, Liberia and head office costs in the UK. Subsequent to this review the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence and meet its financial obligations as they fall due for the foreseeable future.

Accordingly, the Directors continue to adopt the going concern basis in preparing the unaudited interim financial information.

2. Segmental reporting

An analysis of the consolidated income statement by operating segment, presented on the same basis as that set out in the 2013 annual report, is set out below. For the purposes of statutory reporting the Kalsaka/Sega reporting segment has been treated as discontinued - see note 7.

A reconciliation of segmental EBITDA to the loss before tax reported in the interim financial statements is as follows:

3. Loss per share

The calculation of basic and diluted loss per ordinary share is based on the following data:

In the six months ended 30 June 2014 the Company recorded a consolidated loss attributable to the equity shareholders of the Company. Accordingly, share options at that time were not dilutive and the diluted loss per share is the same as the basic loss per share. The total of the potentially dilutive share options effect was nil for both dates.

4. Intangible assets

5. Property, plant and equipment