Aureus Mining Inc, the TSX- and AIM-listed mining company that has developed and operates the New Liberty Gold Mine in Liberia, has announced that the mining services contract between its wholly owned subsidiary, Bea Mountain Mining Corporation (BMMC), and MonuRent (Liberia) Limited, together with all underlying MonuRent supplier contracts, has been novated to Atmaca Services (Liberia) Inc (ASLI), a Liberian company that is wholly owned by MNG Gold Jersey Limited, Aureus’ 55 % shareholder. Save for the novation of the contract from MonuRent to ASLI, all terms of the contract will remain the same.
Mining equipment in action at New Liberty. The mine is now transitioning to an owner-operator mining model (photo: Aureus).
As part of the agreement with MonuRent, ASLI will pay to MonuRent cash of US$15,4 million to take ownership of the mining equipment, US$7,1 million cash for the inventory currently on site at New Liberty, US$7,9 million cash for invoiced receivables, approximately US$2,5 million cash for future uninvoiced receivables incurred by BMMC during July and August 2016, and US$4,5 million cash as a contract novation fee.
MonuRent employees will be transferred to ASLI on the same terms and conditions enabling ASLI to operate the contract without an interruption to mining operations at the New Liberty mine.
It is intended that upon completion of an equity fundraising by Aureus, which MNG Gold has agreed in principle to fully underwrite, the sale assets will be sold by ASLI to BMMC at no gain or loss. BMMC will also pay to ASLI a fee of US$4,5 million to terminate the contract, being the same amount as the novation fee paid by ASLI to MonuRent, thereby achieving the transition of BMMC to owner-operator of the mining operations at New Liberty.
The strategic decision to move to an owner-operator mining model is a result of the previously announced on-going review of Aureus’ cost base. Management believes that the adoption of owner-operator mining at New Liberty will significantly reduce the ongoing costs of mining operations and improve the operational and financial flexibility of the company. In order to make an efficient transition to owner-operator mining, Aureus says it will draw on the experience of MNG Gold who successfully owner-operate mining activities at the Kokoya gold mine in Liberia.
Loudon Owen, Aureus’ Lead Director, commented: “We are pleased to have successfully taken the first steps of transitioning Aureus to an owner-operator. We believe this is an attractive financial proposition as the capital requirements associated with completing this transaction are expected to be far outweighed by the significant reductions in future operating costs. In addition, it is an important strategic initiative that gives the company control over the mining fleet. We are grateful to our major shareholder for facilitating this transaction until the company has raised sufficient capital to acquire these assets directly. With ASLI taking ownership of the mining fleet, there is a strong mutual interest between fleet owner and operator in seeing New Liberty deliver on its full potential.”
In an update on operations at New Liberty, Aureus says that following the restart of processing operations in June 2016, the mine is continuing to experience periods of unscheduled plant downtime. Average plant availability has been 66 % over the past 65 days; however, better availability has been achieved in recent weeks. Plant modifications and optimisation activities continue with particular focus on optimising the ball mill grind size and also reagent consumption in the CIL and detoxification circuits of the process plant. Since the restart of processing operations to date, the company has poured and shipped approximately 8 100 ounces of gold.
The detoxification circuit has been continuously operating at a stable level and performing to its design specifications following recent modifications. All discharges from the Tailings Storage Facility (TSF) have been within permitted levels in accordance with the International Cyanide Management Code. However, Aureus is working in conjunction with its consultants to modify the layout and operation of the TSF, including using the TSF as a source of plant make up water, to allow for an increased retention time for process effluent and also to enable more control over future discharges.