Aureus makes history in Liberia with New Liberty

Aureus Mining (AUE-T, AUE-L) is taking big steps towards kick-starting development at its fully owned New Liberty gold project 90 km northwest of Monrovia, Liberia.

Aureus filed its maiden reserve estimate on New Liberty in early February, and followed up by releasing the project’s technical report on March 16.

Initial estimates peg New Liberty’s proven and probable reserves at 8.7 million tonnes grading 3.1 grams gold per tonne for 873,000 contained oz. gold. 

Aureus’ updated resource estimate at New Liberty includes measured and indicated resources totalling 9.3 million tonnes grading 3.6 grams gold for 1.1 million contained oz. gold, and an inferred resource of 4.3 million tonnes carrying 3.5 grams gold for 483,000 contained oz. gold.

The report envisions an open pit with an eight-year mine life and operating cash costs of US$632 per oz. gold. 

The project has a pre-tax net present value of US$260 million with a 62% internal rate of return based on an 8% discount rate, and long-term US$1,350 per oz. gold prices.

Initial capital expenditures are projected at US$113 million accounting for all infrastructure and pre-strip mining costs, including a carbon-in-leach plant built with a 1.1-million-tonne per year capacity. 

Average production is estimated at 123,000 oz. gold for the first four years at a head grade of 3.7 grams gold.

“The project has clear timelines,” chief executive officer David Reading said in a conference call from London on March 12, and noting that the feasibility study is slateed to be complete in the second quarter of 2012.

“The environmental and social impact work is pretty much all there, and we’ll be submitting that study in the second quarter as well,” Reading said. “Our plan is to have full commission following the rainy season in the fourth quarter of 2013.”

New Liberty would be the first modern, commercial gold mine in Liberia. The country is the focus of a joint United Nations development initiative with the U.S., including power and port infrastructure upgrades to the country’s capital of Monrovia.

Reading says the company is in discussions with more than 30 institutions for project financing. Aureus has shortlisted eight lenders, and is assessing political risk insurance premiums and possible debt financing.

New Liberty is one of three gold zones the company has defined under a preliminary exploration program that includes soil, trench and drill sampling. Aureus has outlined a 13-km “gold corridor” that includes the Gondoja, Ndablama and Leopard Rock targets.

In late February the company released assays from nine initial holes of a 24-hole drill program collared at Leopard Rock.

Trenching at Leopard Rock has returned values as high as 6.4 grams gold per tonne over 11 metres. The new drill program has identified further mineralization at depth, with highlights of 4 metres grading 17.6 grams gold starting from 87 metres, 3 metres carrying 9.5 grams gold from 56 metres and 6 metres of 9.4 grams gold from 107 metres.

Aureus has identified 10 prospective targets and completed 42 core drill holes since the maiden reserve estimate. 

The company plans to complete another 25,000 metres of drilling on its 546-sq.-km land package through the end of 2012, and aims to have a feasibility study and updated resource estimate complete by June.

According to financial results released on March 12, Aureus is debt-free and has cash and equivalents worth US$31 million.

The company appears to be a favourite of institutional traders in London, with 78% of its outstanding shares held by institutional houses like RBC, JPMorgan, BlackRock and Macquarie.

Aureus shares increased by 14%, or 15¢, to start the year, jumping to a high of $1.50 before paring first-quarter gains in March. 

The company traded an above-average 20,000 shares following the technical report released on March 16, and shares were valued at $1.20 per share at the session’s close.