Amara Mining Regulatory News (AMA)

20 November 2013 AIM: AMA

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

Q3 2013 UPDATE

Amara Mining plc, the AIM-listed West African focused gold mining company, is pleased to announce an update for the quarter ended 30 September 2013 ("Q3 2013").

HIGHLIGHTS

· Partnership with long-term strategic investor, RDV Corporation (the US-based wealth management company), to bolster Amara through a share purchase agreement with Amlib Holdings plc ("Amlib") and underpin the development projects within the enlarged group. Completion expected on or around 26 November 2013

· Optimisation work for Baomahun Gold Project ("Baomahun") continues to progress - update expected to be delivered in January 2014

· Metallurgical testwork confirms Yaoure Gold Project ("Yaoure") mineralisation is simple, non-refractory and amenable to a variety of processing methods - results received in Q3 2013 demonstrate robust recoveries for low grade samples

· Further Yaoure Mineral Resource update expected in Q4 2013, with Preliminary Economic Assessment ("PEA") in Q1 2014

· Successful integration of Kalsaka Gold Mine ("Kalsaka") and Sega Gold Project ("Sega") completed - ramp up continues with 56,000 ounces annualised production rate achieved since the start of November 2013

· Q3 2013 gold production from Kalsaka of 8,008 ounces reflecting cessation of operations - full year 2013 production is expected to be approximately 40,000 ounces

· Production is anticipated to strengthen significantly in 2014 due to the impact of the higher grade Sega ore - 2014 production from Kalsaka/Sega is expected to be 60,000-70,000 ounces

· Cost cutting measures taking effect, with a 29% decrease in corporate G&A in 9M 2013 on 9M 2012 and a 28% decrease in exploration expenditure in 9M 2013 on 9M 2012

· Cash and liquid assets of US$11.7 million at 30 September 2013, prior to US$10 million cash injection from RDV

Peter Spivey, Chief Executive Officer of Amara, commented:

"The formation of a long-term strategic partnership with RDV positions Amara very strongly for the future. Whilst it has been challenging delivering the Sega project to a tight timeline, I am proud that our team in Burkina Faso has successfully completed the integration of Kalsaka/Sega, achieving our final key milestone for 2013, and I look forward to production ramping up further. Our growth assets continue to progress along the development pipeline, underpinned by stronger cash flow from Kalsaka/Sega in 2014 and the financial support of RDV and Samsung. I anticipate the further Yaoure Mineral Resource update and the results of the Baomahun optimisation work will continue to demonstrate the optionality available to Amara within our growth portfolio."

The Company will host an analyst conference call at 9:30am UK.  Dial in details are as follows:

Telephone number (toll free from UK): 0808 237 0030

Other parts of the world: +44 (0)203 139 4830

Passcode: 93020719#

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.

For more information please contact:

About Amara Mining plc

Amara is a gold developer-producer with assets in West Africa. The Company generates cash flow through its Kalsaka/Sega gold mine in Burkina Faso. Amara remains focused on its objective of becoming a mid-tier producer through the development of its Baomahun project in Sierra Leone and its Yaoure project in Côte d'Ivoire. With its experience of bringing new mines into production and a project pipeline spanning three countries, Amara aims to further increase its production profile with highly prospective opportunities across all assets.

OPERATIONAL REVIEW

Overview

Following feedback from Amara's investors, and as the Company is no longer listed on the TSX, Amara has produced an abbreviated quarterly update for Q3 2013 and intends to do the same for quarters one and three going forwards.

As recently announced, the Company entered into a share purchase agreement with Amlib, a privately held gold exploration company of which RDV is the majority shareholder, pursuant to which Amara will acquire US$10 million cash, a drilling operation and three exploration licences in Liberia for an aggregate value of US$11.0 million. The cash will be used for the advancement of Baomahun and the ongoing exploration of Yaoure whilst the drilling company, ADSL, will significantly reduce future direct drilling expenditure for Amara. In addition to the exploration upside potential of the exploration licences, the Company will benefit from a new strategic long-term shareholder in RDV to underpin the Company's ability to finance future growth plans.

At Amara's Yaoure Gold Project in Côte d'Ivoire, the Company is focused on delivering a further Mineral Resource update during Q4 2013, where the currently defined 1.7Moz Inferred Mineral Resource (34.6Mt at 1.5g/t) and 0.3Moz Indicated Mineral Resource (8.0Mt at 1.3g/t) are contained within 40% of the total mineralised volume drilled. Outside of this area, exploration outlined an along-strike and down-dip exploration target of two to three million ounces of gold contained within 50Mt to 60Mt of mineralisation grading 1.3g/t to 1.5g/t.[i] In-fill drilling was completed in H1 2013 focused on this target which forms the basis of the expected Mineral Resource update in Q4 2013. Amara is completing a PEA for the project based on the updated Mineral Resource to demonstrate Yaoure's robust economics resulting from the simple metallurgy, shallow dipping, near surface nature of the ore-body and excellent existing infrastructure, including access to cheap hydro-electric power ("HEP"). This is expected to be delivered in Q1 2014.

At Baomahun in Sierra Leone, work continues on the key optimisation scenario generated by the Feasibility Study ("FS"). Through a smaller open pit and plant, Amara has identified an opportunity to substantially reduce the upfront capital requirement of the project processing the high grade core of the ore-body and ensure the plant is suitable for the long term underground potential of the deposit. The results of this work are on track to be released in January 2014.

At Kalsaka/Sega in Burkina Faso, Amara achieved the third of its three key objectives for the year, which were:

· Delivery of a Mineral Resource update for Yaoure - achieved in Q1 2013

· Completion of the Feasibility Study ("FS") for Baomahun - achieved in Q2 2013

· Successful integration of Sega with Kalsaka - achieved in Q3 2013, with gold flow strengthening in Q4 2013

The mining licence for Sega was received on 18 July 2013 and trucking began on 16 September 2013. Stacking of Sega ore began in late September and gold production in November is already benefiting from processing higher grade ore. While production in Q3 2013 was weaker than expected, the higher grade Sega ore is now being realised and Kalsaka/Sega is producing at an annualised rate of 56,000 ounces per annum, with the ramp up expected to continue throughout Q4 2013. Production in 2013 is anticipated to be approximately 40,000 ounces, reflecting the delay between stacking and gold recovery in a heap leach. Amara expects production to be 60,000-70,000 ounces in 2014 as a result of the re-optimised mine plan for Sega[ii], which is foreseen to have a positive impact on cash costs and to generate robust cash flow for Amara at the current gold price.

Group Reserves and Resources[iii]

Production Highlights

Baomahun, Sierra Leone

Feasibility Study

The Baomahun FS, which was completed in Q2 2013 and released on 02 July 2013, generated three recommendations for optimisation. Amara believes that there is an opportunity to improve Baomahun's robust economics by reducing the initial capital outlay and payback period for the project.

Work is on-going on the key recommendation, which is to substantially reduce the upfront capex requirement through a smaller open pit and processing plant. This scenario would allow higher average grade ore to be processed through a more capital efficient plant. The results from the initial whittle shells suggest that this would still generate robust production from Baomahun's high grade core and maintain a swift payback period. Work on this near-term optimisation scenario is expected to be completed in January 2014.

Exploration

Drilling ceased at Baomahun at the end of Q1 2013. Expenditure at Baomahun in Q3 2013 was US$1.7 million, which was incurred through work on the FS, low-cost along-strike target generation techniques and footprint costs. Expenditure in Q4 2013 at the project is expected to reduce further.

Yaoure, Côte d'Ivoire

Work continued during the quarter on the further Mineral Resource update for Yaoure. In Q1 2013 Amara delivered an Inferred Mineral Resource of 1.7 million ounces (34.6Mt at 1.52g/t) and an upgraded Indicated Mineral Resource of 0.3 million ounces (8.0Mt at 1.31g/t)[iv], which were contained within 40% of the total mineralised volume drilled. During H1 2013, Amara conducted an in-fill drilling campaign which was focused on promoting the remaining 60%, which lies outside the currently defined Inferred Mineral Resource envelope. These results will form the basis of the Mineral Resource update, which is expected to be released by the end of the year.

Preliminary Economic Assessment

Amara is completing a PEA for Yaoure based on the updated Mineral Resource, which is expected to be completed in Q1 2014. Previously announced metallurgical testwork has demonstrated that the mineralisation is simple and non-refractory, identifying three potential processing options for the material: whole ore leaching, froth flotation and heap leaching. The ultimate processing method will be chosen taking into account the availability of HEP for the project and the other excellent infrastructure, including tarmac roads and an abundant water supply, and the positive impact that this will have on Yaoure's overall economics.

Further metallurgical testwork was undertaken in Q3 2013 to further refine each processing method and ensure recoveries for lower grade samples (

The latest testwork focused on lower grade samples ranging between 0.38g/t and 1.27g/t, with an average head grade of 0.65g/t. This demonstrated that the overall leach recoveries remain high at these lower grades, averaging 92.7% after 24 hours via CIL. The flotation testwork included re-grinding the initial flotation concentrate to achieve a stronger overall recovery. The initial testwork demonstrated that 89% of the gold is concentrated in 1.4% of the original material via the float process with an overall recovery of 81.4%. The updated testwork has shown an improved overall recovery of 85% with the flotation concentrate reground prior to intensive leaching.

Ongoing metallurgical testwork will be undertaken to ensure that recoveries, reagent consumptions and bond ball work indices are truly representative of the ore-body prior to the issue of a pre-feasibility or feasibility study. Further work will also be performed on the amenability of the oxide resources at Yaoure to recovery via heap leach.

Exploration

Drilling ceased at Yaoure in H1 2013 as the in-fill drilling campaign was completed and in line with Amara's strategy across its assets to conserve cash. Expenditure at Yaoure in Q3 2013 was US$1.0 million, which includes the work towards the Mineral Resource update and footprint costs. The project has now entered a more evaluative phase, so expenditure is expected to be at a similarly low level in Q4 2013 as work continues on the PEA, which is expected to be delivered in Q1 2014.

As part of the share purchase agreement with Amlib, Amara acquired Amlib Drilling Services Liberia ("ADSL"). ADSL is an established drilling business that has operated in Liberia for 10 years. The operational team has combined experienced of over 80 years' and have provided services to Amlib and external clients with a number of diamond drill rigs plus supporting equipment and infrastructure. Amara intends to use some of the drill rigs and operational team for the 2014 drilling campaign at Yaoure. This has the potential to significantly reduce future direct drilling expenditure in 2014, with estimated savings of US$1 million for every 14,000 metres drilled, maximising the Company's exploration budgets.

Kalsaka/Sega, Burkina Faso

Production Statistics

Trucking began from Sega on 16 September 2013, following the receipt of the mining licence for the project on 18 July 2013. Stacking of ore commenced in late September and, whilst ramp-up continues, gold production in November is already benefiting from the higher grade ore being processed. During November 2013, Kalsaka/Sega reached an annualised production rate of 56,000 ounces and this is expected to continue to strengthen during Q4 2013. Production in 2014 is expected to be approximately 60,000-70,000 ounces.

31kt of Sega ore was stacked in Q3 2013 with an average headgrade of 1.96g/t, which is significantly stronger than the grade of the remaining Kalsaka reserves processed during Q3 2013 (0.87g/t). Although the processing plant did not receive a full quarter of this higher grade ore from Sega, the positive impact of this small contribution of ore was recognised in the average headgrade processed, lifting it above 1g/t. The headgrade of the material from Sega is expected to improve as Amara accesses the highest grade areas of the deposit with an average headgrade of 2.41g/t within the re-optimised mine plan.

As reported in the H1/Q2 2013 Results, mining ceased at Kalsaka in July 2013 in response to the weaker gold price. Amara intended to process the transitional ore stockpile prior to the commencement of mining at Sega. However the material was less oxidised and with a lower average headgrade than expected, so Amara made the decision to stop, and thus processed 50% less ore in Q3 2013 than in Q2 2013. As a result of the later start to the commencement of trucking of Sega ore due to permitting delays, production for 2013 is expected to be approximately 40,000 ounces. Ongoing community discussions relating to haulage issues have prevented Amara from fully recovering the shortfall to production in the remainder of 2013.

However production has begun to strengthen in Q4 2013 and as a result of the delay in the commencement of trucking, more Sega ore will be available in 2014. Due to the nature of a heap leach cycle, production is expected to continue to increase as more of the stacked Sega ore flows out of the heap and cash costs are anticipated to reduce due to the improved headgrade and tonnages.

Exploration expenditure at Kalsaka/Sega in Q3 2013 was US$0.9 million, which is attributable to low-cost target generation work and drilling with a single RAB rig. Drilling ceased at the project at the end of Q3 2013 and thus expenditure is expected to decrease substantially in Q4 2013.  This reflects the Company's focus on ensuring the most optimal use of funds, with exploration at Yaoure likely to deliver significantly more value than at Kalsaka/Sega.

Corporate

Strategic Partnership with RDV Corporation and Share Purchase Agreement with Amlib

Amara announced on 07 November 2013 a strategic partnership with RDV as a major shareholder. RDV is a multi-generational family wealth management business for the extended DeVos family. Its stated investment approach is to be a long-term supportive shareholder that aligns itself with groups that offer industry-leading knowledge and capabilities in various sectors and markets. RDV has invested in West African gold as the majority shareholder of Amlib since 1999 and this transaction better aligns its gold equity investment with its investment philosophy. With a firm belief in the opportunity that Amara offers for a diversified growth story in the region, RDV intends to be a long-term strategic backer of Amara as it develops the Baomahun and Yaoure projects, whilst delivering sustainable growth through grassroots exploration across the region.

RDV is the majority shareholder of Amlib and through a share purchase agreement, Amara will acquire US$10 million cash, Amlib's drilling assets and three exploration licences in Liberia. The aggregate value of the transaction is US$11.0 million and it is expected to complete on or around 26 November 2013. The cash will be used in the ongoing progression of Baomahun and the exploration of Yaoure, solidifying Amara's financial foundation. The drilling company, ADSL, will significantly reduce direct drilling expenditure at Yaoure.

Prior to the transaction, Amara had a producing gold mine, a feasibility stage project and an advanced exploration project. The Amlib assets provide the final part of the development pipeline: early-stage exploration. Since Amara has a strong presence in neighbouring Sierra Leone, the Company's advancement into Liberia can be undertaken in a cost effective manner using existing management and procurement structures, with management's focus remaining on moving Baomahun and Yaoure along the development curve.

Group Financial Highlights

Exploration and Capital Expenditure

As a result of feedback from investors, allied with the decision to de-list from the TSX, a full set of financial statements has not been included in the quarterly update.

Cash costs at Kalsaka were high during Q3 2013, reflecting the cessation of the operations, with the final ore from Kalsaka stacked in the period. With only 212kt of ore processed at an average grade of 1.03g/t the high costs are partly due to the fixed administrative costs for the site being spread over a smaller number of ounces. The major impact however is due to the low grade of material processed in 2013. For Q3 2013 the vast majority of the reported costs relate to material mined and stacked in H1 2013. Accordingly, actual cash flows from operating activities were significantly better than the operating losses reported, reflecting the realisation of working capital.

The gross loss for Q3 2013 has been impacted by the exceptional write down of US$2.0 million relating to transitional ore from Kalsaka. This material had been mined earlier in the Kalsaka mine life, but on processing the head grade was found to be significantly lower than anticipated. As a result, a decision was taken to cease processing this transitional material during Q3 as with a low head grade, a lower recovery than oxide ore and the current gold price it was deemed uneconomic.

The impact of cost cutting measures previously announced has started to be realised in Q3 2013, with corporate G&A costs (excluding share option charges) reduced from US$1.8 million in Q1 2013 to US$1.1 million in Q3 2013. Savings have also been realised at operational sites, together with reduced exploration activity, reducing exploration capital expenditure from US$8.5 million in Q1 2013 to US$3.6 million in Q3 2013. This reflected ongoing costs associated with the Baomahun FS and optimisation, plus the Yaoure Mineral Resource update, alongside holding costs. In Burkina Faso, Q3 2013 marks the end of current exploration programmes and accordingly further savings are anticipated in Q4 2013.

The loss for the period includes an impairment of US$0.9 million relating to exploration costs at Kalsaka/Sega. Following the final results it has been decided that none of the targets warrant immediate follow up due to the high grades needed for profitable production at the current gold price, and the significant low grade resources already delineated that could extend the mine life in the event of a recovery in the gold price.

The Company remains focused on maintaining a robust cash balance, with US$11.7 million of cash and bullion at the end of Q3 2013 after the majority of the Sega capital expenditure requirements have been incurred. Only US$4.2 million of the Sega capital expenditure has not been committed, which relates to the community relocation costs. Discussions are ongoing with affected communities and these funds are expected to be spent throughout Q4 2013 and 2014.

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, pre-tax cash margin 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.