4
MODERN MINING
July 2014
MINING News
African Consolidated Resources (AFCR),
the AIM-listed resources and develop-
ment company, has signed a conditional
agreement with Falcon Gold Zimbabwe
to purchase the Dalny mine, which is
proximal to both AFCR’s flagship 3,56 Moz
Pickstone-Peerless gold project (Pickstone)
and its Gadzema gold project in Zimbabwe,
for a net cost of US$8,5 million.
The company intends to raise approxi-
mately US$18 million in debt and equity in
order to bring Pickstone into production,
finance the acquisition of Dalny and sup-
port general corporate purposes.
Dalny is located 56 km from Pickstone
Part equity payment for Malelane drilling campaign
Ferrex plc, the AIM-quoted iron ore and
manganese development company oper-
ating in Africa, has signed a contract, on a
part equity payment basis, to complete a
drilling programme at the Malelane iron
ore project in South Africa. The drilling
programme, due to commence this month
(July), is aimed at increasing the current
inferred resource of 139 Mt at 37 % Fe.
Between 1 200 m and 1 600 m of dia-
mond drilling will be completed on the
southern banded iron formation (BIF)
adjacent to historic mine workings.
The objective of the drill campaign is
to increase and prove up an additional
resource in the southern target area (3 km
BIF strike) and will assist in Pre-Feasibility
Study planning. The total exploration tar-
get at Malelane, says Ferrex, is 1,6 to 2,0 Bt
at 28-30 % Fe.
A Scoping Study based on the current
resource has detailed robust economics for
an initial 1,8 Mt/a open-pit, low strip ratio
operation with a 57 % Fe product over a
16,6 year LOM.
Ferrex is to pay approximately 35 % of
the drill cost in cash with 65 % of the drill
cost being paid in Ferrex shares.
Comments Ferrex’s MD, Dave Reeves:
“I am pleased to announce the com-
mencement of the drilling programme at
Malelane, which should see us increase
the resource at this project where the pre-
viously completed Scoping Study showed
positive economic results. This new explo-
ration programme has been facilitated by
the drilling contractor, who understands
the tight capital markets in which we
operate and suggested the proposed pay-
ment system. We aim to use this as the
base case for potential co-operation with
the contractor on our other iron ore and
manganese projects in Africa to maximise
shareholder value with the company’s
available funds.
“The new drill campaign will be centred
on an old ochre mine 6,5 km east of the
previous drilling, where there is potential
enrichment of the banded iron horizon.
Results of the drilling will be used in on-
going studies and to allow flexibility in the
mining permit submission.”
Dalny acquisition will allow fast-tracking of Pickstone
cost of the new combined Pickstone/Dalny
operation at US$700/oz over the life of
mine. The IRR is put at 73 % with payback
within 15 months.
“This is a potential game-changer for
AFCR with considerable blue-sky oppor-
tunities,” comments Roy Pitchford, the
company’s CEO. “We have already identi-
fied a high grade, low cost gold resource
at Pickstone and I am encouraged by our
low-risk profile due to the low cost of pro-
duction and conservative mining methods.
Subject to financing and completion, this
acquisition will further enhance the already
attractive economics of Pickstone, and
Trial pit at the Pickstone-Peerless gold project. The Dalny acquisition could see the project entering production by the end of 2014 (photo: AFCR).
and 46 km from Gadzema and has an
operational processing plant and ancil-
lary infrastructure, which would provide a
central processing plant to treat ore from
Pickstone.
The advantages of the deal, accord-
ing to AFCR, are that it will allow the
company to fast-track Pickstone – which
has a reserve of 1,0 Moz (16,6 Mt grading
1,9 g/t) – into production and eliminate
construction risk through the use of exist-
ing infrastructure. The upfront capex for
Pickstone will be reduced to US$14,3 mil-
lion as compared to the PFS estimate of
US$27,3 million. AFCR estimates the cash
