Amara Mining Regulatory News (AMA)

29 September 2014 AIM: AMA

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

YAOURE MINERAL RESOURCE UPDATE: INCREASED OUNCES AT HIGHER GRADE IN ECONOMIC PIT SHELLS AND 248% INCREASE IN INDICATED RESOURCES

Amara Mining plc, the AIM-listed West African focused gold mining company,is pleased to announce an updated NI 43-101 compliant Mineral Resource estimate for its 100% owned Yaoure Gold Project ("Yaoure") in Côte d'Ivoire.

HIGHLIGHTS

· Increased ounces at a higher grade in the economic pit shells to be used for mine design

o 4.5 million ounces at 1.5g/t in the US$950 per ounce pit shell (Indicated: 50.0Mt at 1.45g/t for 2,337koz; Inferred: 44.9Mt at 1.50g/t for 2,160koz) representing an increase of 269,000 ounces at a 5% higher grade

o 3.5 million ounces at 1.6g/t in the US$800 per ounce pit shell (Indicated: 35.5Mt at 1.56g/t for 1,783koz; Inferred: 31.4Mt at 1.67g/t for 1,688koz) representing an increase of 191,000 at a 14% higher grade

· 248% increase in Indicated ounces with 43% of 6.3 million ounces contained within the US$1,500 per ounce pit-shell now within the Indicated category (Indicated: 62.0Mt at 1.36g/t for 2,717koz; Inferred: 86.6Mt at 1.30g/t for 3,610koz)

· In-fill drilling programme has confirmed the continuity of high grade mineralised zones in both the CMA and Yaoure Central zone, reflected in the improving grade of the overall deposit

NEXT STEPS

· Comprehensive metallurgical test work programme underway focused on recovery rate, reagent consumptions and comminution requirements - results expected in Q4 2014

· Second Mineral Resource update expected in December 2014, incorporating all the results from the 2014 drilling campaign - expected to upgrade a further portion of the Inferred resources to the Indicated category

· Pre-Feasibility Study ("PFS") anticipated to be completed in Q1 2015 - expected to confirm compelling economics outlined in the Preliminary Economic Assessment ("PEA") due to Yaoure's excellent existing infrastructure, including the availability of low-cost hydro-electric power

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

"The Yaoure deposit continues to outperform our expectations, with the Mineral Resource update showing strong improvements in the most economic part of the deposit, where our in-fill drilling programme has been focused. Within the US$800 and US$950 per ounce pit shells we have increased both the contained ounces and the overall grade of the resource. We have confirmed the continuity of the mineralisation at Yaoure, defining additional resources in areas previously classified as waste, together with gaining a better understanding of the high grade core of the deposit.

"In addition, we have increased the confidence in the Mineral Resource estimate. The Indicated category now accounts for over 50% of the 3.5 million ounces contained in the US$800 pit shell and 4.5 million ounces contained within the US$950 per ounce pit shell. I am confident that the full resource update due in December 2014 will deliver a strong platform for the Pre-Feasibility Study, which is expected to be delivered in Q1 2015. With over 4 million ounces contained in a single economic pit and compelling economics benefiting from low cost hydro-electric power, Yaoure stands out as the pre-eminent gold development asset in West Africa."

Increased Ounces in Economic Pit Designs

The Mineral Resource estimate announced today is based upon the initial drill results from the 2014 drill campaign; 70 diamond drill holes and 35 reverse circulation holes comprising 26,686 metres of drilling conducted up to conducted up to late July 2014, with results received to 08 August 2014. The objective of the 2014 drill campaign is to improve the geological understanding of mineralisation controls and gold distribution. This is expected to facilitate the promotion of the Mineral Resource classification from the Inferred category to the Indicated category through closer spaced drilling, increasing confidence in the deposit.

As a result of the closer spaced drilling, the Mineral Resource estimate delivers a 248% increase in Indicated resources within the US$1500 per ounce pit shell to 2.7 million ounces. The head grade also increases to 1.36g/t, a 14% increase in comparison to the December 2013 Mineral Resource estimate. Most encouragingly the US$800 and US$950 per ounce pit shells, which were used as the basis for the different scenarios of the PEA released in March 2014, deliver an increase in both head grade and gold content. Over 50% of the ounces within these economic pit shells are in the Indicated category, giving Amara greater confidence in the deposit. Section diagrams are available at www.amaramining.com/Operations/Yaoure. Information on Yaoure's geology and Mineral Resource classification is included in Appendix A and Appendix B.

The 83,000 metre drilling programme is now over 75% complete and is on track to conclude in mid-October 2014. The second Mineral Resource update, expected in December 2014, will incorporate all the results from the 2014 campaign.

Confirmed Continuity of High Grade CMA Zone

The CMA zone represents the highest, most continuous mineralisation seen at Yaoure. The potential exists to selectively mine this higher grade area at the start of Yaoure's mine life, which may positively impact upfront capital costs. The recent infill drilling programme has further refined Amara's model of the CMA zone. At a 0.5g/t cut-off grade, the CMA zone contains Indicated Mineral Resources of 0.9 million ounces of gold at a grade of 2.29g/t and Inferred Mineral Resources of 0.5 million ounces of gold at a grade of 1.73g/t for a total of 1.4 million ounces at 2.06g/t. CMA's head grade is anticipated to be higher than reported due to the effect of dilution within the block model.

Mineral Resource Estimate

The Mineral Resource estimate is reported above a 0.5g/t cut-off and constrained within an open pit shell derived using a long term gold price of US$1,500/oz reaching a maximum nominal depth of -120 elevation or approximately 320 metres deep. The project is robust at higher cut-off grades as demonstrated in the table below. Importantly, the resource is robust at lower gold prices with 71% of the contained gold within the US$1,500/oz pit shell included within the US$950/oz pit shell.

Yaoure Mineral Resource estimate within a US$800 per ounce pit shell, including cut-off grade sensitivity, as of 23 September 2014

Yaoure Mineral Resource estimate within a US$950 per ounce pit shell, including cut-off grade sensitivity, as of 23 September 2014

Yaoure Mineral Resource estimate within a US$1500 per ounce pit shell, including cut-off grade sensitivity, as of 23 September 2014

Notes to tables

1. The effective date of the Yaoure Mineral Resource estimate is 23 September 2014, prepared by Mario E Rossi, GeoSystems International, Inc.

2. The gold price used in the Mineral Resource estimate is as specified above, assuming an open pit mining scenario, processing via tank leaching. Pit slopes are 35º in oxide, 46 º in sulphide. Recoveries have been assumed at 90%.

3. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

4. There are no known environmental, permitting, legal, title, taxation, socio-economic, marketing, and political or other relevant issues that may materially affect the resource estimates.

5. Totals and average grades are subject to rounding to the appropriate precision and some columns or rows may not compute exactly as shown.

6. The stated resources include dilution in the block model that relates to the level of low selectivity envisioned in an open pit operation, assuming 10m bench heights.

The Mineral Resource update is NI 43-101 compliant however a technical report will not be published until after the full resource update utilising all of the 2014 drill data, as is permitted by the AIM Rules for Companies. Amara expects to deliver a second, more comprehensive Mineral Resource update for Yaoure in December 2014 and a NI 43-101 compliant technical report will be published on Amara's website 45 days after the delivery of this announcement. A management conference call will also be held following this announcement.

Next Steps

Amara is fully-funded to deliver a PFS for Yaoure in Q1 2015. Work is underway on all elements of the PFS, including an extensive metallurgical test work programme focused on confirming Yaoure's recovery rate, reagent consumptions and comminution requirements. The results are expected in Q4 2014. A second, more comprehensive Mineral Resource update is expected in December 2014, which is anticipated to upgrade further ounces from Inferred to the Indicated category. The PFS will be based on the results of the Mineral Resource updates and the metallurgical test work, in addition to the excellent existing infrastructure at Yaoure, which has a positive impact on upfront capital costs and operating costs.

Background on Yaoure Gold Project

Amara delivered a Preliminary Economic Assessment for Yaoure in Q1 2014. It demonstrated:

· Yaoure has the potential to be one of the top 10 gold mines in Africa by production and top 50 in the world

· Forecast average production of 325,000 ounces per annum over a 12 year mine life and all-in sustaining costs of US$691 per ounce

· Headline 8Mtpa scenario delivers an IRR of 32% at a gold price of US$1,250 per ounce and an NPV of US$688 million (8% discount rate)

· Yaoure is one of the few development projects in West Africa that remains resilient at low gold prices, with an IRR of 23% at US$1,100 per ounce

· The project is flexible and delivers similarly strong returns over a range of alternative throughput scenarios

The compelling economics are driven by the excellent existing infrastructure in Côte d'Ivoire, with low cost hydro-electric power from the Kossou dam (5km from site) and a tarred dual carriageway to within 40km of site.

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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.

The RC and DD drilling programmes at Yaoure are being undertaken by an independent drilling contractor. Typically samples for assaying were taken at one metre intervals. Sample preparation was carried out at the Company's facility at Yaoure, prior to fire assay at Actlabs in Ouagadougou, Burkina Faso. The samples were crushed down to minus 2mm and then pulverised down to 90% passing 75 microns, prior to analysis for gold by 50g fire assay. As part of the Company's QA/QC procedures, internationally recognised standards, duplicates and blanks were inserted. Check assays are being carried out at ALS Geochemistry in Johannesburg, South Africa. The laboratories used are independent of the Company.

Peter Brown is a "Qualified Person" within the definition of National Instrument 43-101 and has reviewed and approved the information contained within this announcement. Dr Brown (MIMMM) is the Group Exploration Manager.

Mario Rossi is a "Qualified Person" within the definition of National Instrument 43-101 and is responsible for the estimation of the Yaoure Mineral Resource. He has reviewed and approved the relevant technical information relating to the resource estimates in this release. Mr Rossi (Fellow AusIMM, Member CIM, Member SME) is Principal Geostatistician of GeoSystems International, Inc. 

Appendix 1: Yaoure's Geology

Yaoure is a structurally controlled, mesothermal, quartz-carbonate vein-style gold deposit hosted by Early Proterozoic (Birimian) basaltic metavolcanics, granodiorite intrusions and subvolcanic intrusive rocks, at greenschist facies metamorphic grade.

The North-South trending CMA mineralisation is a discrete continuous body, on average 13m thick, within a 20m to 45m wide brittle-ductile shear zone, dipping between 24 degrees and 30 degrees to the east. The North-South trending Yaoure Central mineralization is a 200m (150-250m) thick zone, approximately 140m (70-220m) below the CMA zone, dipping at approximately 30 degrees to the east. The Yaoure Central mineralisation reaches its peak under the Yaoure Central pit where the moderately dipping Yaoure Central zone intersects a subvertical N-S trending granodiorite stock. The principal mineralised zones at both Yaoure Central and in particular at CMA, are centred on low-angle, brittle-ductile, reverse shear zones which acted as first-order conduits for hydrothermal fluid flow.

Appendix 2: Mineral Resource Classification

The Yaoure Mineral Resource classification was developed in two stages:

1. The conditions for Measured, Indicated, and Inferred categories were defined based on the data spacing, the geologic model, and the amount of information used to estimate each block. These criteria were expressed in simple terms, such as the number of holes and composites required to exist within specific distances and orientations for each category.

2. The classification was implemented either through the estimation passes, or other algorithm applied on the block model that will reflect the criteria defined in the previous step.

Appendix 3: Resource Estimation Parameters

1. The estimates of Mineral Resources were calculated in accordance with the definitions adopted by the Canadian Institute of Mining Metallurgy and Petroleum ("CIM") and incorporated into NI 43-101. The Mineral Resource estimate was carried out by Mario Rossi of GeoSystems International, Inc.

2. Block model preparation and resource estimation has been completed using Datamine and GSLib. One-metre primary samples were used to define mineralised outline wireframes, whilst two-metre down hole composites were used for statistical analysis, variography and resource estimation. High grade capping depended on the estimation method used.

3. Resource estimation has been completed using a combination of Multiple Indicator Kriging (MIK), Indicator-modified Ordinary Kriging, and Inverse Distance Cubed, depending on the estimation domain. Bulk density has been estimated into the block model using Ordinary Kriging.

4. Ounces represent estimated gold content present in the tonnes of material which would be mined and processed once they are converted to a Mineral Reserve. Mining recovery, dilution and mill recovery rates have not been applied in calculating the contained ounces.

5. In accordance with the guidelines set out by the CIM and contained within NI 43-101, this mineral resource estimate for the Yaoure property uses a 0.5 g/t Au cut-off and a US$1,500/oz Au "Resource Pit" to represent that portion of the resource which has "reasonable prospects for economic extraction" from an open pit mining scenario. The open pit mining scenario considers that both oxides and sulphides assuming a Carbon-in-Leach process plant economics. Pit slopes are 44º in oxide, 53º in sulphide; and metallurgical recoveries have been assumed at 90%.

6. Amara's attributable portion of the mineral resource estimate is 100%, although on development the Government of Côte d'Ivoire will be entitled to a 10% free carried interest.

7. The classification methodology used was based on a combination of drill density, data quality, and evaluations of the statistical and spatial characteristics of the gold mineralisation.

8. Glossary

"Mineral Resource": A mineral resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized 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 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.

"Inferred Mineral Resource": is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

"Indicated Mineral Resource": is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonable assumed.

The above definitions of "Mineral Resource", "Inferred Mineral Resource", and "Indicated Mineral Resource" conform to CIM definitions as defined in the CIM Standards on Mineral Resources and Reserves - Definitions and Guidelines as required by National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators.