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Auroch Minerals To Fast Track Manica Gold Project Into Production

Auroch Minerals (ASX:AOU) has found a means to develop its Manica Gold Project in Mozambique and to fast track it into production by developing existing non-refractory and transitional resources at the Fair Bride prospect.

A new Scoping Study has confirmed the technical and commercial viability of building a 40,000 ounces per annum mine, with a Definitive Feasibility Study to commence immediately.

Scoping Study results

Prepared by independent advisers JP Mining Consulting, these revealed the following as the basis for further studies:

- Viable simple shell open pits for Fair Bride and Dot's Luck deposits;
- shallow depth underground open stoping for the Guy Fawkes deposit;
- A centralised processing plant on the Mining Concession with a throughput rate of 720,000tpa (60,000tpm);
- An average head grade of 2.23 g/t gold to produce +40,000 oz per annum
- Initial capital expenditure (CAPEX) of $31,617,244 in May 2013 constant money terms;
- Estimated production of 273,469oz gold over an operating life of mine (LOM) of 7 years;
- Average total operating cost of $39.29/t milled or US$641.92/oz produced (excludes capex and before tax, depreciation and royalties); and
- The Study has assumed a long term gold price of US$1,200/oz

Managing director Dean Cunningham said, "The development of Manica will give us a first mover advantage and allow us to accelerate our consolidation strategy in the area, giving the company momentum and critical mass.

"This will provide a stable platform from which the company can create cash flow and operate at the lower end of the total cash cost curve. These are exciting times for all stakeholders as we make the transition from exploration to development."

Chairman Glenn Whiddon added, "As Auroch has successfully progressed its exploration program, the technical teams' understanding of the Manica Northern Shear Zone has improved greatly.

"The company has considered the results to date and its circumstances to formulate a decisive strategy which provides a path to production and a potential source of near term cash flow. Auroch has every confidence in the robust nature of the Manica Gold Project and we are excited to be moving towards production."

Focus for Auroch

- Complete the Environmental License requirements on the Manica Gold Project Mining Concession. This entails collectively finalising and submitting the following by 1 February 2014. This entails finalising an Environmental Impact Assessment report and also a land use licence which allows the holder to use a portion of land with exclusivity in Mozambique.

Initiate the DFS:

- Completion of infill drilling at the Guy Fawkes and Dot's Luck deposits to upgrade the confidence categories of existing resources (cost US$360K); and
- Metallurgical test work at the Fair Bride, Guy Fawkes and Dot's Luck Project deposits to confirm the amenability of the non-refractory resources to traditional carbon in leach processing (cost US$60K).

DFS Grant Funding

Auroch will submit a Grant Funding application with the Department of Trade and Industry of South Africa on or before 16 July 2013. The Feasibility Grant funding, if approved, will permit Auroch to fund certain DFS expenses up to a maximum of 55% of ZAR15 million ($0.9 million) attributed to completing the DFS. Once approved, the DFS will commence. Approval is expected during Q4 2013.

Drilling Program

Auroch has completed its initial scout drilling program at the Guy Fawkes Project Sector, the results of which are due.

Timeline to production

The timeline to production entails completion of the DFS by March 2014 and project construction commencing in June 2014.


Auroch' refinement of its strategy for the Manica Gold project is exactly what the market is looking for - exploiting nearer term production potential and generating cash flow as early as possible to fund exploration in a tougher funding environment.

That there is significant exploration upside at the 2.9 million ounce Manica gold deposit is axiomatic, and today's announcement provides a road to faster production for Auroch and at less cost.

Forecast average total OPEX of US$641.92/oz would provide a very significant profit margin even at current prices while the forecast inital CAPEX of $31.6 million is eminently more palative relative to similar sized projects.

Today's announcement should begin the process of returning Auroch to investor radars and is value accretive particularly given the paucity of the current market cap. of just $3 million, for a project with a total mineral resource of 2.97 million ounces and cash of +$3 million.

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