Aureus making history in Liberia with New Liberty

Vancouver — Aureus Mining (AUE-T, AUE-L) is taking big steps towards kick-starting development at its 100%-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 oz. of contained gold. The report cites an optimized open pit model with an eight-year mine life and operating cash costs of US$632 per oz. of gold.

The project has a pre-tax net present value of US$260 million with an internal rate of return of 62% based on an 8% discount rate and long-term US$1350 per oz. gold price.

Initial capital expenditures are projected at US$113 million, accounting for all infrastructure and pre-strip mining costs, including construction of a carbon-in-leach plant with a 1.1 million tonnes per year capacity. Average production is estimated at 123,000 oz. of gold for the first four years at a head grade of 3.7 grams 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 oz. of contained gold, and an additional inferred resource of 4.3 million tonnes carrying 3.5 grams gold for 483,000 contained oz. of gold.

“The project has clear timelines,” Chief executive officer David Reading said via conference call from London on March 12, “The feasibility study will 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. Our plan is to have full commission following the rainy season in the fourth quarter of 2013.”

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

Reading said the company is in discussions with more than 30 institutions for project financing. Aureus has short-listed eight lenders, and is assessing political risk insurance premiums and possible bond 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 the initial nine assays from a 24-hole drill program collared at Leopard Rock.

Surface trenching at the target has returned values as high as 6.4 grams gold per tonne over 11 metres. The new drill program 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 grading 9.4 grams gold from 107 metres including a higher-grade intersect of 4 metres carrying 13.9 grams gold.

Aureus has identified ten additional prospective targets and completed 42 core-drill holes since the maiden reserve estimate was completed. The company plans to complete another 25,000 metres worth of drilling on its 546 sq.km land package through the end of 2012, and is aiming to have a feasibility study and updated resource estimate complete by the end of the second quarter.

According to financial results released on March 12, Aureus is currently 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 in the possession of institutional houses like RBC, JP Morgan, BlackRock, and Macquarie Investment.

In Toronto, 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 announcement of the technical report on March 16, and was valued at $1.20 per share at the session’s close.