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February 25, 2008
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African Copper Plc: The Revised Mowana Mine Production Schedule Provides for
Outstanding Growth in the First Five Years - Production at Mowana is expected to grow from 5,500 tonnes of copper in 2008 to 29,000 tonnes in 2012
- Cash costs of production are expected to drop from US$2.48/lb to US$1.49/lb over same period
- A full shovel fleet and 14 haul trucks are on site, and mining activities are accelerating
- First concentrate is expected in second quarter, with the first shipment in June
- Exploration extends mineralization for 800 metres south of the open pit, resulting in a potential 40% increase in the strike length of the deposit
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LONDON, UNITED KINGDOM--(Marketwire - Feb. 25, 2008) - African Copper Plc ("African Copper" or the "Company") (TSX:ACU)(AIM:ACU)(BOTSWANA:AFRICAN COPPER) issues a new schedule for the first five years of production at its Mowana Mine in Botswana. This schedule improves upon the one included in the report entitled "National Instrument 43-101 Technical Report On The Mowana Mine, Botswana" dated 26 November 2007 by Read, Swatman & Voigt (Pty) Ltd. (the "Technical Report"), which is available on www.sedar.com or on the Company's website.
African Copper management reviewed the operating parameters - mining schedules, metallurgical results, offtake agreement and cost build-up - and optimized the production profile for the first five years in the Mowana Mine open pit. The new production schedule has the potential to generate higher production, lower costs and defer additional capital requirements for two years. The main features of the new schedule, which runs from 2008 to 2012, are as follows:
- Only high-grade oxide will be processed during 2008 and 2009, while the lower grade material will be stockpiled.
- Recoveries will be maximized, resulting in higher production.
- The incorporation of a Dense Media Separation ("DMS") plant will be delayed until mid-2010 when sufficient quantities of supergene and sulphide material are available. As a result, the related estimated capital expenditure of approximately US$13 million for the DMS plant will be postponed for two years.
- The deferring of the DMS plant allows time to accumulate sufficient supergene and sulphide material to feed the concentrator so that it can run at full capacity for the balance of the mine life.
Production is expected to be 11% higher in the first five years of mining
Planned production growth between 2008 and 2012 is expected to be a function of both grade and higher throughput of supergene and sulphide material. The table below shows the production of copper in concentrate and the cash costs for the years 2008 to 2012, as estimated by the Company:
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2008 2009 2010 2011 2012
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Estimated Cash Cost US$/lb $ 2.48 $ 1.90 $ 2.05 $ 1.78 $ 1.49
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Estimated
Production Tonnes copper 5,500 12,100 18,000 23,000 29,000
---------------------------------------------------------------------------The Technical Report listed the operating cost assumptions for the Mowana Mine which were used to develop the above estimates (see Section 18: pages 127-133 of the Technical Report). The results presented in the Technical Report utilized the lowest recoveries recorded during testwork, in order to produce the highest grade of copper in concentrate (44% oxide copper recovery to produce 27% to 29% copper in concentrate).
Incorporating the results of the recovery testwork and integrating these with the pricing variables contained in the offtake agreement (see press release of 25 January, 2008), African Copper personnel have confirmed that producing a lower grade copper in concentrate leads to higher recoveries and production. Revenue is maximized at a 60% to 70% oxide copper recovery, producing a 21% to 25% copper in concentrate. The reduction in the concentrate grade results in an estimated 11% increase in the production of copper in concentrate during the first five years of the Mowana Mine, positively impacting revenue and cash flow.
Cash costs are expected to be lower
The Technical Report also incorporated a DMS plant in 2008, which required both higher capital expenditures and accelerated stripping in 2008 and 2009 to feed the processing plant at the higher throughput tonnages. The use of the DMS plant to pre-concentrate oxide material resulted in insufficient feed to the floatation concentrator reducing the estimated plant utilization to below 65% in the first two years of operation. These factors resulted in higher expected cash costs and reduced estimated revenue in the start-up years.
The processing of only high-grade oxide material in 2008 and 2009, directly through the concentrator, is expected to enable the concentrator to run at full capacity during those years, thereby reducing expected cash costs and stripping expenditures accordingly.
Capital expenditures are delayed
Under the new production schedule, sufficient quantities of supergene and sulphide ores will not be delivered until the middle of 2010. Given that the proposed DMS plant enhances copper recoveries only for these ores, its installation can be deferred. This allows the Company to postpone approximately US$13 million of capital spending for two years.
Exploration extends mineralization next to the open pit
Recent exploration has increased the strike extent of the known mineralization at Mowana by up to 40% or 800 metres south of the open pit. The Company is currently awaiting final assays and will release the results as they become available, which is expected to be early in the second quarter of 2008. Assuming that the grades encountered in this area are economic, the Company will integrate this newly-discovered material into the comprehensive mine plan for Mowana.
"The estimated production growth that the Mowana Mine is able to demonstrate is outstanding when compared to other copper projects globally", commented Joe Hamilton, African Copper's Chief Executive Officer. "We are excited by the recent exploration success to the south of the main deposit and we anticipate that this area could provide an extension to the open pit operations beyond 2014. In addition, recent design work has shown that we can access deeper high-grade sulphide mineralization to the north of the open pit in as little as two years by utilizing underground methods. This thick, high-grade mineralization is open to the north and to depth. With over 70% of the resource base at Mowana lying outside of the open-pit, this deeper material may be used to supplement open-pit feed. We anticipate being able to maintain production above 30,000 tonnes of copper per year beyond 2012 by integrating an underground mine into Mowana."
Underground feasibility
A scoping study of an underground mine was completed at the end of December 2007. In addition to the capital and operating cost estimates delivered in December, further design work has been undertaken to establish mining schedules for the trial mining phase. Ore access strategy and target locations for optimal early exposure of supergene and sulphide mineralization are being reviewed. Applying standard decline access with a combination of Sub-Level Caving and Sub-Level Open Stoping for ore extraction, a revised study is due in March. Production estimates for trial mining will be incorporated into capital cost estimates. Capital costs for an underground mine are not expected to differ materially from previous guidance of about US$50 to $60 million.
Commissioning
Construction for the Mowana Mine is 90% complete and commissioning with first concentrate is expected early in the second quarter of 2008. The mining fleet, including large haul trucks and shovels, has been mobilized and are on site. Ore continues to be loaded onto the stockpile in anticipation of full production in the second quarter of 2008.
African Copper PLC
African Copper is a tri-listed (AIM, TSX, Botswana Stock Exchange) international exploration and development company. African Copper is developing its first copper mine at the Mowana Mining Project scheduled to commence production in the second quarter of 2008.
The Company's other interests are the Matsitama Exploration Project concessions adjacent to the Mowana Mining Project, which contain ten high priority drill-ready targets and 35 lower priority targets.
This press release has been prepared under the supervision of Joseph Hamilton, P.Geo. and Chief Executive Officer of African Copper, who is a "qualified person" as defined in Canada by National Instrument 43-101.
For more information on African Copper, please visit www.africancopper.com or email info@africancoppper.com.
This press release contains or refers to forward-looking information, including statements regarding estimates and/or assumptions about future production, revenue and cash flows, estimated operating and capital costs, potential mineralization, potential mineral resources and reserves, mine development plans, recoveries and timing of the commencement of operations, and is based on current expectations that involve a number of business risks and uncertainties. Actual results may vary from the forward-looking information contained herein. Factors that could cause actual results to differ materially from any forward-looking information include, but are not limited to, uncertainty regarding production estimates, failure to convert estimated mineral resources to reserves, the possibility that actual circumstances will differ from the estimates and assumptions used in the mining plan for Mowana Mine (there is no certainty that the production schedule, recoveries and/or operating costs proposed will be achieved), the grade and recovery of ore which is mined varying from estimates (including, in particular the inferred mineral resources included in the mine plan not being recoverable at the grade and/or volume used in the calculation of the estimated operating costs), the capital and operating costs varying significantly from estimates, political risks arising from operating in Africa, uncertainties relating to the availability and costs of financing needed in the future (including to build the DMS plant and complete the development of the Mowana Mine), changes in equity and/or debt markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry. When used in this press release, words such as "schedule", "could", "plan", "anticipate", "estimate", "expect", "believe", "intend", "may" and similar expressions are forward-looking statements.
Although the Company believes that its expectations reflected in this forward-looking information are reasonable, such information involves risks and uncertainties and no assurance can be given that actual results will be consistent with this forward-looking information. Forward-looking information is subject to significant risks and uncertainties, and other factors that could cause actual results to differ materially from expected results. Accordingly, readers should not place undue reliance on forward-looking information. This forward-looking information is made as of the date hereof and the Company assumes no responsibility to update it or to revise it to reflect new events or circumstances, except as required by law.
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