Positive Update From Migori Project, Kenya

RNS Number : 3530I

Red Rock Resources plc

29 May 2014

 



Red Rock Resources Plc

("Red Rock" or the "Company")

Positive Preliminary Technical and Economic Assessment of Nyanza Deposit, Migori Project Kenya

29 May 2014

Red Rock Resources plc, the mining and exploration company with gold interests in Kenya, Colombia and Ivory Coast, is pleased to announce the results of a Preliminary Technical and Economic Assessment on the Nyanza deposit of the Migori Project, SW Kenya, on which the Company currently has 15% direct and 32.27% indirect interest and options. This study represents the first stage of a Bankable Feasibility Study ("BFS") for the Nyanza deposit.  Upon completion of the full BFS, Red Rock will acquire a 60% direct interest in the project. 

Highlights

As reported on 17th January 2014, this study constitutes a Preliminary Technical and Economic Assessment on the viability of the 200,000oz Au Nyanza deposit as a stand-alone open pit operation. Red Rock is pleased to announce:

·     Projected life of mine revenue from gold sales of US$95 million (at US$1,200/oz Au price)

·     Capital cost of US$3 million recoverable within first 6 months of operation

·     Production of approximately 80,000oz of gold over 9 years mine life

·     This option gives a pre-tax NPV (at a 10% discount rate) of $8 million

A review of all existing technical information and a site visit was carried out by South Africa-based geological and mining consultancy, Applied Geology and Mining Ltd ("AG&M") in Q1 2014. This initial study has confirmed a potentially viable open pit gold mining operation with average operating cost of US$958/oz of gold recovered.

The results present two open pit mining options, utilising a mining contractor for the Nyanza deposit and recommendations for further work to advance the project to the next stage of feasibility. AG&M considered low capital and low operating expenditure solutions with accelerated lead time to revenue generation in their assessment. From the options presented by AG&M, Red Rock considers that an open pit, gravity circuit operation to recover gold from the entire mineable inventory at Nyanza is likely to provide the best roadmap for an efficient operation. The tailings would be stockpiled and treated as an asset for further leach recovery should finances allow.

AG&M have prepared an Executive Summary of the Preliminary Technical and Economic Assessment for this release:

http://www.rns-pdf.londonstockexchange.com/rns/3530I_-2014-5-29.pdf

AG&M Comments on Project Potential

Applied Geology & Mining Ltd concludes that the Nyanza deposit has demonstrated sufficient viability to proceed to the next phase of Feasibility study but requires continuing work to enhance the confidence in the geological model and mineral resources. Though this study focuses purely on the Nyanza Gold Deposit, the presence of other gold deposits in the greater Mikei area may further enhance the economic viability of the Nyanza Project.

Further Work

Based on the outcome of this study, the company is working on a detailed plan of activities to commence prior to commissioning the second phase of the Feasibility Study. Future work on the Nyanza deposit to enhance the project economics will include:

·     Continuing to upgrade the geological model by geological mapping and the reassessment of historic drill core

·     Infill drilling to upgrade the current Mineral Resources to Mineral Reserves

·     Expansion of the  resource base by defining new resources both along strike and at depth

·     Follow-up metallurgical test work

Other activities will include working alongside Kenyan government agencies regarding licencing and artisanal activities.

Company Chairman Andrew Bell comments:

"The results of this Technical Assessment indicate that the Nyanza pit is a potentially robust project and we will continue to work on cost optimisation as we continue our studies. RRR will proceed with its objectives of upgrading and expanding existing Mineral Resources at Nyanza in parallel with further feasibility phases as well as continuing greenfield exploration. The development of this Project to the mining stage continues to be our focus to increase total project value."

For further information contact:

Andrew Bell 0207 747 9990 or 0776 647 4849               Chairman Red Rock Resources plc

Colin Aaronson / David Hignell 0207 383 5100            NOMAD Grant Thornton UK LLP

Nick Emerson 01483 413500                                           Broker SI Capital Ltd.

Saif Janjua 0207 382 8416                                               Joint Broker Beaufort Securities Ltd

Rupert Trefgarne 0203 128 8817                                     Media Relations MHP Communications

Qualified Person Statement

The technical data included in the Preliminary Technical & Economic Assessment to which this statement is linked that relates to exploration targets, exploration results, or Mineral Resources is based on information reviewed and compiled by Mr Mark Austin, Pr.Sci.Nat BSc (Hons) Geology, a Fellow of The Geological Society of South Africa with more than 30 years of mining experience. Mr Austin is a consultant to the company and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken, to qualify as a Qualified Person as defined in the "AIM Note for Mining and Oil and Gas Companies". Mr Austin consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Forward Looking Statements

This report contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information might include, among other things, statements with respect to the Company's business strategy, plans, objectives, performance, outlook, growth, shareholder value, projections, targets and expectations, Mineral Reserves and Resources, results of exploration and related expenses, property acquisitions, mine development, mine operations, drilling activity, sampling and other data, grade and recovery levels, future production, capital costs, expenditures for environmental matters, life of mine, completion dates, gold prices, demand for gold, and currency exchange rates.

Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'outlook', 'anticipate', 'project', 'target', 'likely', 'believe', 'estimate', 'expect', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'will', 'plan', 'forecast' and similar expressions. Persons reading this report are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, including but not limited to the risk factors set out in the Company's Annual Report. This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. The Company disclaims any intent or obligations to update or revise any forward-looking statements whether as a result of new information, estimates or options, future events or results.

 

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