Liberia – Aureus Mining believes that the adoption of an owner-operator mining model at New Liberty will significantly reduce the ongoing costs of mining operations and improve operational and financial flexibility.
This is taking place amid an ongoing comprehensive review by the Aureus management team of the company’s cost base with a view to improving cash costs and operating margins to ensure the company is well-positioned to deliver its full potential.
The contract between Bea Mountain Mining Corporation (BMMC), a wholly-owned subsidiary of Aureus Mining and MonuRent, together with all underlying MonuRent supplier contracts, have been novated to MNG Gold-owned Liberian company Atmaca Services – which owns 55% of Aureus.
Save for the novation of the contract from MonuRent to ASLI, all terms of the contract will remain the same.
As part of the agreement with MonuRent, Atmaca Services will pay US$15.4 million in cash to MonuRent to take ownership of the mining equipment; $7.1 million in cash for the inventory currently on site at New Liberty; $7.9 million in cash for invoiced receivables; about $2.5 million in cash for future uninvoiced receivables incurred by BMMC during July and August 2016, (together the sale assets); and $4.5 million in cash as a contract novation fee.
Moreover, the MonuRent employees will be transferred to Atmaca Services on the same terms and conditions enabling Atmaca to operate the contract without an interruption to mining operations at New Liberty.
Aureus Mining expects that the cost of adopting an owner-operator model will be the most substantial cost arising from management’s review, and will draw on the experience of MNG Gold who successfully owner-operate mining activities at the Kokoya gold mine in Liberia.
It is intended that upon completion of an equity fundraising by the company, which MNG Gold has agreed in principle to fully underwrite, the sale assets will be sold by Atmaca Services to BMMC at no gain or loss.
BMMC will also pay to Atmaca Services a fee of $4.5 million to terminate the contract, being the same amount as the novation fee paid by Atmaca Services to MonuRent, thereby achieving the transition of BMMC to owner-operator of the mining operations at the New Liberty mine.
“We believe the transition to an owner operator model 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,” says Aureus Mining lead director Loudon Owen.
Processing plant restart update
Following the restart of processing operations at New Liberty in June 2016, the Aureus continues 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 carbon-in-leach and detoxification circuits of the process plant.
Since the restart of processing operations to date, the Company has poured and shipped approximately 8 100 oz 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. However, the company 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.