Canal+ Regulatory News (CAN)

14 Nov 2007 07:01

Central African Gold PLC14 November 2007 Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining 14 November 2007 Central African Gold Plc ("CAG" or the "Company") Production Update at Bibiani Central African Gold plc, the AIM traded gold mining and exploration company,announces an update on progress at the Bibiani gold mine in Ghana. Theunderground development at Bibiani continues to build momentum with totalproduction for the year expected to be circa 25,000 oz to 30,000 oz. This isbelow management's previous forecast of approximately 40,000 oz and is primarilydue to the underperformance of the tailings operation. However, with recentproduction improving, CAG is confident that, in line with managementexpectations, production on an annualised rate will be increased to 100,000 ozAu by the end of 2008. On a more general basis, the project is progressing well with many advanceshaving been made. As previously announced, reserves and resources haveincreased significantly during 2007, with the total global mineral resourceestimate at Bibiani up 300%, confirming the directors' belief that the Main Zoneorebody sustains a multi-million ounce deposit. The ore reserve estimate is upcirca fourfold to 1.05 million oz Au and as anticipated, reserve grades areshowing between 3.5g/t and 4.0g/t. Equipment necessary for the productionbuild-up is now on site and underground development at the mine continues ontrack and within budget, due for completion by the end of 2008. Greg Hunter, CEO of CAG said: "The tailings retreatment operation has beendisappointing having been hit by a number of short term difficulties, which willbe behind us by year end. Logistical problems and availability of consumableshave also taken their toll on the underground project, but the fundamentalsremain very much intact. The orebody is robust and momentum is being built onthe development and stoping front. To date, we have increased the total globalmineral resource estimate by 300% and our ore reserve estimate by 391%, whichunderpins our confidence that the project has the potential for a viableunderground mining operation with at least a 10 year production life. Wetherefore look forward to a strong finish at year end and the carry through into2008." Additional information Ounce production at the Bibiani gold mine has been lower than anticipated,principally due to difficulties in treating the old mine tailings. The lowergrades that have been realised are to a degree related to a reduced mining rateachieved in the higher grade "Dam 1" area of the tailings reserve, where sandymaterial and associated hydro-sluicing difficulties have hampered production.However, new re-mining methods are being implemented to overcome these problemsand the higher grade tailings from the Dam 1 area, will be brought to account inthe future. Additionally, it is expected that tonnes delivered to the plant will be around25,000 tonnes lower than planned, essentially two weeks behind schedule, due tolate delivery of equipment and consumables. During October 2007 7,320 tonnes were delivered to mill at a grade of 2.72g/t,for 641 ounces of contained metal. Rigorous grade reconciliation proceduresimplemented through the Technical Services Department on the mine, includingunderground diamond drilling, underground channel sampling, and ROM trucksampling, yield a 98% reconciliation of ROM vs. block model estimate. November2007 production is ahead of call, and a portion of the October shortfall will beregained. Pre-development of the first stope has been completed on 7, 8 and 9level, with 7 level as a top holing, 8 level designated as the drill drive and 9level as the draw point level. All draw-points, reef drive and slots have beencompleted in anticipation of the commissioning of the longhole stoping rig.Ring drilling for the first full production stope is scheduled for blasting onthe 26th November 2007. Pre -development of the second stope as well asdevelopment toward the conveyor decline is also underway. The grade the Company anticipate and has achieved to date of just less than 3g/tis the "block model grade" of the first stope to be mined, which is being usedto commission the long-hole mining equipment and test the open stoping miningmethod. Current channel sampling indications in the area indicate that it ispossible that actual grade delivered could exceed this forecast. A further cause of the lower production, largely outside the Company's directcontrol, has been the unavailability of grid power during the period of loadshedding by the National Power Utility, when supply was unable to meet demand.At the height of the load shedding exercise, over and above actual electricityoutage time, the disruption caused to the process by repeated short durationtrip-outs and dips in supply took its toll on the process in the form oflowering recoveries and damage to electrical machinery. This situation has begunto remedy itself with the good rains that the region has experienced. Inaddition to this, standby electricity generating capacity for the undergroundmine is due to be installed early in the New Year. The Company also lost production time due to equipment breakdowns. Inparticular, the multistage high pressure monitoring water pumps, which weredamaged prior to the arrival of CAG personnel on site in early January 2007,could not be repaired satisfactorily in-country and replacement units from SouthAfrica took some weeks to source. Furthermore, the oxygen generating plant,necessary for the cyanide leaching process for gold extraction, needed "molecular sieve" material (zeolite) available only in the USA, which has causedanother lengthy delay. The consequence of no oxygen supply is some 10%reduction in gold recoveries. The oxygen plant is expected to be operationalagain by year end. Concurrent with the restoration of the oxygen plant, construction of an in-lineoxygen injection system is nearing completion, which is expected to enhance goldrecovery in the Carbon-in-leach circuit. The benefit of this is expected to beseen from December 2007 onwards. By June 2007, the continued under budget production from the tailings dam led toCAG making the decision to contract Fraser Alexander Tailings ("FAT") to takeover the re-mining operations. Despite the presence of FAT on site,improvements in production have not been immediately forthcoming, as thephysical configuration of the old tailings dams are not conducive to high miningrates. Additional equipment supplied by FAT to facilitate improved mining ratesin the more difficult areas of the old dams has recently arrived on site and isin the process of being installed. FAT has assisted in developing a revisedproduction plan for the remaining tailings, which will continue into 2008. * * ENDS * * For further information please visit www.centralafricangold.com or contact: Central African Gold PlcGreg Hunter/Nicole Broome Tel: +27 (0) 11 676 2500 In London:St Brides Media & Finance LtdHugo de Salis/Felicity Edwards Tel: +44 (0) 20 7242 4477 Strand Partners LimitedSimon Raggett/Braden Saunders Tel: +44 (0) 20 7409 3494 RBC Capital MarketsMartin Eales/Andrew Smith Tel: +44 (0) 20 7029 7881 In South Africa:Russell and AssociatesCharmane Russell Tel: + 27 (0) 11 880 3924 Notes to Editors: Central African Gold Plc, admitted to AIM in April 2004, was established toacquire gold assets with a geographical focus on Africa. The Company hasestablished a sound portfolio with projects in Ghana, Mali, Zimbabwe andBotswana. It has a highly experienced management team, which has worked togetherfor four years managing six underground greenstone gold mining operations andbuilding exploration portfolios. CAG's portfolio includes the producing Bibiani gold mine and prospectinglicences in Ghana, which it acquired from AngloGold Ashanti Limited, three jointventures in Mali covering 22 prospective permits and a licence in Botswanacovering the extension of the Kraaipan greenstone belt from South Africa. CAGrecently acquired five mines and extensive exploration properties in Zimbabwe.The management team is evaluating additional prospects in Africa to establishCAG as a leading mid-tier African gold producer with world class exploration andproduction assets. This information is provided by RNS The company news service from the London Stock Exchange