REG - African Pioneer PLC - Ongombo Project - Update

African PioneerAnnouncement

20/12/2021 07:01

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RNS Number : 0994W  African Pioneer PLC  20 December 2021

20 December 2021

African Pioneer Plc

("African Pioneer" or "the Company")

 

Ongombo Project, Namibia - Resource Update,

Scoping Study and Submission of Mining Licence Application

 

African Pioneer plc ("APP" or the "Company"), the exploration and resource
development company with projects located in Namibia, Botswana and Zambia, is
pleased to provide an update on the 85% owned Ongombo Copper Mine Project
("Ongombo" or the "Project") situated in Namibia and to inform shareholders
that a Mining Licence Application ("ML" or the "Licence") has been submitted
to the Ministry of Mines and Energy.

 

 

 3.76 Mt increase in Measured & Indicated Mineral Resource      The Ongombo Mineral Resource has increased by 3.76 million tonnes in the

                                                              Measured & Indicated category to 10.47Mt @ 1.4% Cu, 7g/t Ag at a cut-off
                                                                of 1.0% Cu, with 0.35g/t Au categorised as Inferred following a JORC (2012)
                                                                compliant review by external consultant, Red Bush Analytics.
 Positive Scoping Study Conclusions                             The base case of the Scoping Study by Mine design specialists, Practara
                                                                Consulting,  generated a post-tax NPV of US$39 million using a 10% discount
                                                                rate and an IRR of 27.7%,with payback from first production estimated to be
                                                                2.4 years.

                                                                Practara considers that the economic study for Ongombo meets the "Criteria for
                                                                Reasonable Prospects for Eventual Economic Extraction".

 Mining Licence submitted                                       A Mining Licence application has been submitted to the Ministry of Mines and
                                                                Energy of Namibia.

 Partners to manage application                                 Windhoek based Shali Group in conjunction with Avanti Resources has been
                                                                engaged to follow through with the Ongombo Copper Project Mining Licence
                                                                application

 Met test work                                                  Metallurgical test work to commence early in the New Year

 Geophysics planned                                             Possible deposit extensions to be investigated by geophysics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Chairman, Colin Bird said:

 

"The Company intends to progress all pertinent matters in order to bring the
proposed mine into operation as soon as possible and will provide further
updates as appropriate. As an order of magnitude, we are targeting a mine to
process some 400-500Kt per annum with a copper production in the region of
some 7-8Kt per annum. This mining plan is coincident with our stated ambition
to join the small copper mining sector which internationally has largely been
eliminated and, in our opinion, will be an important component of tomorrow's
copper production. The deposit limits are not yet fully defined and we will be
carrying out further investigations to either increase mine production or
extend mine life."

 

 

Mineral Resource Estimation

Red Bush Analytics has re-worked all the historical drilling data from Ongombo
generated by Gold Fields Namibia. In addition, more recent drilling by
Namibian Copper in 2014, and the Shali Group in 2017, has been incorporated
into the database. The updated 2021 Mineral Resource Estimation incorporates a
total of 184 validated holes. These comprise 195 intersections from 153 Gold
Fields holes drilled in the 1980's to early 1990's, 2 holes from the 2008
Namibian Copper (NCO programme), 23 holes from the 2014 NCO programme, and 6
holes from the 2017 Shali Group programme.

 

The revised JORC (2012)-compliant mineral resource estimate, using a 1.0% Cu
cut-off, increases the quantity of Measured and Indicated Mineral Resources by
3.76Mt to 10.47Mt at a grade of 1.39% Cu (previously 1.52% Cu), compared to
the 2013 Coffey Mining report, and all Measured Resources have been
re-classified as Indicated. The re-classification is due to the inclusion of
the 2014 drilling which has no borehole deviation survey data available. The
increase in tonnage is due to inclusion of downgraded 2013 Measured Mineral
Resources, addition of new material from the 2014 drilling and re-evaluated
tonnages due to reinterpretation of structure and statistics. The Au grade has
also been reassessed and has been increased to 0.35g/t. Due to high level of
uncertainty related to the scarcity of gold data, all Au resources are
classified as Inferred Resources.

 

The resource estimate also includes a further 1.65Mt @ 1.37% Cu in the
Inferred Resource category.

 

 Mineral Resources as at 30 September 2021 - JORC (2012)-compliant*
                                 In situ tonnes & grade at 1.0% Cu cut-off
 Resource Category               Tonnes        Cu            Ag            Au
                                 (Mt)          (%)           (g/t)         (g/t)**
 Measured
 Central Shoot                   0             -             -             -
 East/Ost Shoot                  -             -             -             -
 Indicated                       10.47
 Central Shoot                   3.67          1.61          7.06          0.35
 East/Ost Shoot                  6.80          1.27          6.9           0.35
 Total Measured & Indicated      10.47         1.39          7.0           0.35
 Inferred
 Central Shoot                   0.39          1.38          7.0           0.35
 East/Ost Shoot                  1.26          1.37          7.4           0.35
 Total                           1.65          1.37          7.3           0.35

* All figures refer to the total Project Mineral Resource

** All Au is classified as Inferred

 

Scoping Study

A detailed review and upgrade of the 2014 Coffey Mining Scoping Study was
carried out by Johannesburg based mine design specialists Practara Pty Ltd
("Practara").

 

The updated economic evaluation was based on ore grades of 1.4% Cu, 6.62g/t Ag
and 0.32g/t Au.  The base case and two alternative studies all generate a
positive NPV, with the base case producing the most optimal outcome.
Sensitivity analysis demonstrates that the Project is naturally most sensitive
to Cu price, FX, and Cu grade.

 

Economic analysis with costs in Namibian dollars (N$) yielded a positive
business case for the Project and generated a post-tax NPV of US$39 million
using a 10% discount rate and an IRR of 27.7% . The peak funding requirement
is estimated at US$50 million and payback from first production is estimated
to be 2.4 years. Practara considers that the new economic study of the Ongombo
Project meets the Criteria for Reasonable Prospects for Eventual Economic
Extraction. The key results of the base case in the Practara scoping study are
summarised in the table below.

 

 Metric                                UoM                    Result
 Business Returns:
 Net Present Value (Post-Tax) *        US$ million **         39
 Internal Rate of Return (Post-Tax)    % real                 27.7%
 Payback Period (from 1st Production)  years                  2.4
 Peak Funding                          US$ million (real) **  50
 EBITDA Margin                         %                      41%
 Capital Efficiency (NPV / CapEx)      %                      93%

 

Note

* The NPV was calculated using a 10% discount rate and a copper price of
US$3.72 /lb.

** FX rate used to convert N$ to US$ is US$ 1 = N$16.76

 

Metallurgical Test Work

Planning is under way for a large diameter diamond drilling programme early in
2022 to obtain representative ore samples for metallurgical test work. This
test work will provide guidance regarding the optimal processing route for the
Ongombo ore.

 

Geophysical Programme

Namibian based EM and Natural Source Audio-Magnetic (NSAMT) specialists,
Gregory Symons Geophysics, have been commissioned to re-work all available
NSAMT data at Ongombo. The NSAMT technique is a useful aid to detecting
mineralisation at Ongombo and, in particular, can be used to indicate
potential for deeper extensions to the deposit down-plunge and down-dip.

 

 

 

 African Pioneer Plc

+44 (0)20 7581 4477
 Colin Bird

 Executive Chairman

 Beaumont Cornish (Financial Adviser)    +44 (0) 020 7628 3396

Roland Cornish

 Novum Securities Limited (Broker)

 Jon Belliss                             +44 (0) 20 7399 9400

+44 (0)20 7581 4477

 

Beaumont Cornish (Financial Adviser)

Roland Cornish

 

+44 (0) 020 7628 3396

Novum Securities Limited (Broker)

Jon Belliss

 

 

+44 (0) 20 7399 9400

 

or visit  https://africanpioneerplc.com/ (https://africanpioneerplc.com/)

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").

 

Qualified Person:

Technical information in this announcement has been reviewed by Edward (Ed)
Slowey, BSc, PGeo, a technical adviser to African Pioneer Plc. Mr Slowey is a
graduate geologist with more than 40 years' relevant experience in mineral
exploration and mining, a founder member of the Institute of Geologists of
Ireland and is a Qualified Person under the AIM rules. Mr Slowey has reviewed
and approved this announcement.

 

 

Glossary

 

A 'Mineral Resource' is a concentration or occurrence of solid material of
economic interest in or on the Earth's crust in such form, grade (or quality),
and quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade (or quality), continuity and other
geological characteristics of a Mineral Resource are known, estimated or
interpreted from specific geological evidence and knowledge, including
sampling. Mineral Resources are sub-divided, in order of increasing geological
confidence, into Inferred, Indicated and Measured categories.

 

An 'Indicated Mineral Resource' is that part of a Mineral Resource for which
quantity, grade (or quality), densities, shape and physical characteristics
are estimated with sufficient confidence to allow the application of Modifying
Factors in sufficient detail to support mine planning and evaluation of the
economic viability of the deposit.

 

An 'Inferred Mineral Resource' is that part of a Mineral Resource for which
quantity and grade (or quality) are estimated on the basis of limited
geological evidence and sampling. Geological evidence is sufficient to imply
but not verify geological and grade (or quality) continuity. It is based on
exploration, sampling and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill
holes.

 

"Ag"      Silver

"Au"      Gold

"Cu"      Copper

"g/t"      grammes per tonne

"Kt"       thousand tonnes

"Mt"      million tonnes

 

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