Shearwater Regulatory News (SWG)

19 Dec 2006 07:02

Aurum Mining PLC19 December 2006 For immediate release 19 December 2006 AURUM MINING PLC ("Aurum" or "the Company") Completion of Bankable Feasibility Study for Andash Zone 1 Aurum Mining plc (AIM: AUR), the company formed to acquire gold and othermineral extraction projects in the Former Soviet Union (FSU), is pleased toannounce the successful completion of the bankable feasibility study for theproject financing and construction of the proposed mine at Andash Zone 1 in theKyrgyz Republic. The feasibility study was compiled by Wardell Armstong International (WAI), aleading UK mining consultant with particular expertise in the FSU, inassociation with engineering consultants GBM and ground engineering andenvironmental services group, Golder Associates. The bankable feasibility studyalso takes into account the local feasibility study prepared earlier this yearby Ken-Too Design and Research Centre, the leading Kyrgyz mining consultancy. The feasibility study, which confirms that the open-cast Andash operation willcombine low costs with high production rates, contains the followinghighlights: Measured and indicated resource base increased 12.5% to 19.2 million tons at1.1g/t gold and 0.4% copper Additional low grade measured and indicated resource of 5.74 million tonnes at0.44g/t and 0.15 % copper Proven and probable reserve of 16 million tonnes, containing over 1.2 millionozs of Gold and Gold equivalent in copper giving an in-ground value of over$750m Mining rate of 2m tpa with a pit life of 8.5 years Stripping ratio of 0.8 tonnes of waste to 1 tonne of ore Average cash operating costs of $223 per oz of gold and gold equivalent Capital cost of $55.5 million including contingencies Payback period of 3.3 years and an IRR of 39.7%, The IRR assumes an ongoing price for gold of $550 per oz, with copper fallingfrom an assumed start price of $6480 to $4077 per tonne during the paybackperiod Aurum is in discussions with various parties on a financial package for themine's construction. Construction of the mine, preparatory work for which isalready under way, will begin as soon as finance is in place with commercialproduction expected in 2008. The significant extent of the Zone 1 resource identified in the feasibilitystudy means that the maximum deferred consideration of $5 million in shares willbecome payable under the terms of Aurum's acquisition in 2005 of the Andashproject from Kaldora Company Limited. This consideration has been calculated byreference to $10 for every ounce of gold equivalent to reserve identified in thefeasibility study and will be settled by the Company issuing 2,500,000 ordinaryshares of 1p each. The payment of the maximum consideration in respect of the Zone 1 resource aloneunderlines the quality of the Zone 1 asset and the Company is pleased to notethat no further deferred consideration will fall due in respect of the otherexploration areas within the Andash licence area. The Andash Zone 1 mineable reserves are now Mineable ReservesOre Type Tonnes Au (g/t) Cu (%)Oxide High Grade 2,073,300 0.79 0.40Sulphide High Grade 12,135,270 1.20 0.43Oxide Low Grade 444,700 0.40 0.21Sulphide Low Grade 1,348,100 0.36 0.16Total 16,001,370 1.05 0.40 The life and production rates of the Andash mine are expected to besignificantly greater than was originally anticipated from Zone 1 alone. Therecent positive exploration studies, announced on 16 November 2006, atTokhtonysay, the new Nakhodka exploration area announced on 7 December 2006, aswell as zones 2 and 3 are likely to increase resource potential significantly. Adrilling programme is planned in the New Year to provide further understandingof the potential resource which will be developed using the infrastructuredesigned for zone 1. Mark Jones, Aurum Mining's Chief Executive, said: "The completion of thefeasibility study marks a further important step in the development of theAndash mine, and highlights that our strategy of fast tracking Zone 1, insteadof bringing on all zones concurrently has been the optimal route for Aurum. Wenow have strong upside potential which will further reward all our stakeholders. Following the recent award of a Mining Licence by the Kyrgyz authorities, wehave now completed all of the preparatory work for the project financing of theAndash Zone 1 mine, giving us confidence that we can begin construction of themine in the coming months and produce gold and copper in 2008." For further information: Aurum Mining plc Tel: 020 7478 9050Mark Jones, Chief Executive Arbuthnot Securities Tel: 020 7012 2000Graham Swindells Buchanan Communications Tel: 020 7466 5000Mark Court / Rebecca Skye Dietrich Notes to editors Aurum Mining joined the AIM market of the London Stock Exchange in May 2004 withthe strategy of seeking, evaluating and acquiring gold and other mineralextraction projects in the Former Soviet Union (FSU). In January 2005 theCompany completed its first acquisition, giving the Company an explorationlicence over the Andash gold and copper project in the Kyrgyz Republic. Miningconsultant Wardell Armstrong International has confirmed a JORC resourceestimate of 1.49 million ozs of gold and gold equivalent in Andash Zone 1 inMeasured and Indicated categories. A Mining Licence for the Andash area wasawarded by the Kyrgyz authorities in November 2006. The feasibility study forZone 1 is scheduled for completion by the end of this year, allowing productionto begin in 2008. The Andash project also includes the Zone 2 and Zone 3 alongwith Tokhtonysay, Nakhodka and three other additional exploration areas. This information is provided by RNS The company news service from the London Stock Exchange