Trading Symbols
TSXV: AFR
Frankfurt: OWW
VANCOUVER,
Sept. 19, 2011 /PRNewswire/ - African
Metals Corporation (the "Company" or "AFR") is pleased to report
that one of its subsidiaries has purchased a Dense Media Separation
(DMS) plant, spiral bank and associated ancillary plant equipment,
to commence mining and processing of oxide material from the Luisha
South Project in the Democratic Republic
of the Congo ("DRC").
Highlights
AFR's subsidiaries have:
- Secured a US$3.7 million loan
agreement with Traxys Europe SA
- Executed a 4 year Off-take Agreement with Traxys Europe SA
- Purchased a DMS Plant and Spiral bank with associated
equipment
- Executed a Management Contract with M&J Investments for
managing the mining and processing of the Luisha South material,
and
- Expect to commence production in October
2011
Loan Facility by Traxys Europe SA
Kundelungu Minerals sprl ("Kundelungu"), a
subsidiary of AFR in the DRC, has entered into a secured Loan
Agreement with Traxys Europe SA, ("Traxys"), whereby Traxys has
provided a loan facility of US$3.7
million to purchase a DMS Plant and associated equipment
which will enable AFR's 75% owned DRC subsidiary, Luisha Mining
Enterprise Sprl ("LME"), to commence production at its Luisha South
Project.
Under the terms of the agreement, Kundelungu will
repay the loan facility from 60% of production profits. The
Company has organized the pledge of the shares of certain of its
key subsidiaries to Traxys to provide security for the loan.
Off-Take Agreement with Traxys Europe SA
African Metals Corp through LME has executed an
exclusive Off-Take Agreement with Traxys. The Agreement is for
Traxys to purchase at a competitive London Metal Exchange market
price the copper oxide and sulphide concentrates produced from the
Luisha South Project for a period of 48 months from commencement of
production.
Operating from more than 20 global offices with
over 250 employees, Traxys primarily focuses on the marketing and
sourcing of base metals and concentrates, minor and alloying
metals, industrial minerals and chemicals, materials for steel
mills and foundries and carbon products. Traxys also offers
financial and logistical solutions for the Ferroalloy, Metal,
Mineral, Mining and Energy Industries. Traxys has annual
revenue of approximately US$5
billion.
Plant Purchase Agreement
Kundelungu has purchased a 100% interest and
ownership of a DMS Plant, Spiral bank and ancillary equipment
located in the Katanga Province, DRC for a purchase price of
US$3 million. The plant is the same
one used by AFR to conduct a 200 tonne bulk processing trial of
oxide stockpile material in May 2011
(see AFR's news release of May 20,
2011). Approximately 200 tonnes of material was successfully
processed by the DMS plant to produce a DMS concentrate grading
approximately 32% copper, 1.2% cobalt and a fines concentrate from
the spirals bank grading approximately 28% copper and 1.6% cobalt.
These results highlighted the efficiency of the DMS and Spirals
plant in processing the Luisha South Project material to produce a
saleable product on which AFR could build a profitable
business.
The DMS Plant has already been decommissioned ready
for transport to LME's Luisha South Project where commissioning
will take place over the next three weeks. The plant is rated at a
maximum through put of 100 tonnes per hour which will more than
accommodate AFR's production plans.
Management Agreement
M&J Investments sprl ("M&J"), current
operators of the DMS Plant, have also entered into a binding
Management Contract with Kundelungu for the mining and processing
of Luisha South material for a period of 6 calendar months starting
from commission of the DMS plant. M&J are also engaged to
undertake the necessary training of AFR's key personnel in the
ongoing processing of material through the DMS plant. AFR have
supplemented the M&J contract by engaging mineral processing
professionals to assist in the smooth transition of operations
after the first 6 month period. AFR will also be entering into a
period of recruitment of suitably qualified support personnel to
ensure proper management and control of the operations.
The Management Contract includes payments to
M&J for decommissioning, transportation to the Luisha South
Project and full commissioning of the DMS plants, spirals bank,
recycling ponds, accommodation camp and plant infrastructure.
Plans for the DMS Plant
AFR has completed extensive modelling of the mining
and processing of the Luisha material. The Company will inject a
total of US$5.5 million in capital
expenditure during the first 15 months to enable initial processing
of the oxide material and then subsequent processing of the
sulphide material. Part of this funding comes from the Traxys loan
and the remainder will come from production revenues. The bulk of
this capital expenditure will be for the DMS plant and floatation
cells.
Initially, the Company plans to throughput oxide
material derived from the waste rock stockpile. A staged
installation of floatation cells is also scheduled for the future
treatment of sulphide material as well as oxide tailings.
Internal economic modelling has been completed and
is favourable for the Project however the Company intends to
undertake independent cash flow modelling and present those
findings as they become available.
Nigel Ferguson, CEO
and President of African Metals Corp, commented:
"The Company is very pleased to report the purchase
of the DMS plant with assistance from Traxys. The experience of the
M&J team during the term of the management agreement will
ensure the Luisha Project quickly enters into oxide copper
concentrate production, which we believe will enable Kundelungu to
retire all debt within 9 months and bring the Company into positive
cash flow based on conservative input parameters. The off-take
agreement with Traxys augurs well for the mid to longer term
outlook of the Project. Concurrently the Company will continue
surface drilling to seek extensional mineralisation outside the
current resource area and is also actively assessing several other
projects, from which it hopes it will be able to multiply
production levels."
"AFR has achieved great success in the field during
the last 18 months and with a larger resource estimate recently
announced the Company is confident that this will support
commercial operations well into the future. With the commissioning
of the DMS concentration plant and subsequent floatation circuits,
the anticipated cash flow will make the Company well funded and
able to service its expanding operations in the copper belt through
recently acquired projects. The Company is targeting initial
concentrate production at the Luisha South Project by the middle of
October, 2011."
CAUTION TO INVESTORS
The Luisha South Project includes inferred
mineral resources that are considered too speculative geologically
to have the economic considerations applied to them that would
enable them to be categorized as mineral reserves, and there is no
certainty that the Company's plans to commence production of the
Luisha South Project will be realized. The Company has not
completed a feasibility study, a pre-feasibility study, a scoping
study or a preliminary economic assessment to analyse the economics
of the planned operations, and as a result there is a higher risk
and no guarantee that the operations will be economic.
ON BEHALF OF THE BOARD OF DIRECTORS OF AFRICAN
METALS CORPORATION
"Nigel Ferguson"
Nigel Ferguson
President & CEO
Ronald J. Lawrence,
AIG, the Vice President, Exploration of the Company and a qualified
person under National Instrument 43-101, has verified the data
disclosed in this release.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS NEW RELEASE.
This News Release contains forward-looking
statements. Forward-looking statements are statements which
relate to future events. These statements are only
predictions and involve known and unknown risks, uncertainties and
other factors that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance
or achievements expressed or implied by these forward-looking
statements. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and
reflect our current judgment regarding the direction of our
industry, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Except as
required by applicable law, the Company does not intend to update
any of the forward-looking statements to conform these statements
to actual results.
About African Metals Corporation.
African Metals Corporation [TSXV "AFR"] is a
Canadian listed company focused on the discovery and development of
Copper and Cobalt deposits in the highly mineralized Katanga
Copper Belt of the world renowned Africa Copper Belt in the
Democratic Republic of Congo
("DRC").
AFR purchased the assets of Chevalier Resources
Inc. in March 2010 including an
initial 57% interest in the Luisha South Project within licence
PEPM 4881. In July 2010, AFR
negotiated a further 18% interest in the Project with the option to
increase the equity interest to 90% based on results. The Project
is located 75 kilometres northwest of Lubumbashi, the capital of
Katanga Province and consists of approximately 16.2km².
The Luisha South Project includes a small
historical open pit mine and associated waste rock stockpile and is
underlain by Roan Group sediments which host major Cu-Co deposits
in the DRC. The Luisha South material body was explored between
1923 and 1928 and an oxide deposit with an estimated pre-production
tonnage of approximately 350,000 tonnes at 8.6% Cu was delineated
(the resource estimate non-compliant in terms of NI 43-101).
AFR completed a 2,002 metre RC percussion drilling
program that enabled the estimation of a NI 43-101 compliant maiden
Inferred Resource of 5.8 Million tonnes at 1.3% Cu for 75,400
tonnes of contained copper metal and 0.4% Co for 23,200 tonnes of
contained cobalt metal (using 0.5% Cu cut-off). See the technical
report of Geosure Exploration & Mining Solutions Pty Ltd, dated
November 15, 2010 and filed on
www.sedar.com on December 2, 2010. A
further 1,538.73 metres of diamond core drilling at the Project in
January 2011 enabled a re-estimation
of the resource to produce a NI 43-101 compliant Inferred Resource
of 14.7 Million tonnes at 1.1% Cu for 161,700 tonnes of contained
copper metal and 0.3% Co for 44,100 tonnes of contained cobalt
metal (using a 0.5% Cu cut-off). The revised resource represented
an increase of 114% and 90% respectively of the previous contained
copper and cobalt metal estimates. See the Company's news release
dated August 29, 2011.
The Luisha South Project also covers some three
kilometres of the Roan Group strike length which is favorable for
Cu-Co mineralization.
AFR has also secured option rights over several
projects in Zambia that are
considered prospective for both copper cobalt and in some cases,
gold mineralization. AFR is currently completing initial
exploration of these licences to confirm its intention to continue
with the agreements.
SOURCE African Metals Corporation
