TIDMAEXG
RNS Number : 5415O
AEX Gold Inc
10 February 2021
("AEX" or the "Company")
AEX Provides an Update on its Nalunaq Development
TORONTO, ONTARIO - February 10, 2021 - AEX Gold Inc. (AIM: AEXG;
TSXV: AEX), provides an update on development plans at its Nalunaq
property in South Greenland.
As previously disclosed, AEX is planning the redevelopment of
the Nalunaq mine with the objective of first gold pour by the end
of 2021. In January 2021, the government of Greenland implemented a
temporary travel ban, initially effective until at least the end of
February 2021, although as with many other countries in the world
there is a risk that this could be extended.
The development of Nalunaq is dependent on the Company being
able to access the entirety of the property with a significant
number of both externally contracted and locally sourced labour.
Given the travel restrictions, there can be no certainty that the
Company will be able to deploy the sizeable workforce necessary to
complete the development of the project and meet the timeframes
initially envisaged.
Furthermore, as part of the Company's detailed planning prior to
deploying the greater part of the Nalunaq development programme,
the project budget has incurred a number of areas of very
significant cost increase, many related to the increased cost of
logistics as result of the COVID pandemic, as well as widespread
and material inflation relating to mining activities and equipment,
resulting from the positive commodity price dynamic globally.
Whilst the project's contingencies were intended to cover such cost
overruns, in addition to the above cost increases, there are two
notable areas of specific overrun, which in aggregate would require
further external capital to resolve.
Firstly, AEX has selected the inclusion of a flotation circuit
as a low cost and highly value accretive secondary recovery process
targeting a recovery rate of 91-97%, increasing the previous
recovery rate from 65-70%. This process has significant economic
and ESG benefits for the mine. It does however require a change in
civil engineering requirements.
Secondly, AEX has engaged an external consultant to assess
various aspects of the mine, including the structural stability of
a concrete bulkhead located near the main portal inside the mine.
This bulkhead supports historic tailings left by the previous
operator and retains the tailings within an underground tailings
storage facility. The bulkhead has been assessed as being unsafe
and the Board has resolved that it cannot proceed with its previous
development plan until this is rectified. Whilst the Board does not
consider this to be a major project in its own right, in light of
COVID related restrictions to the movement of personnel, it
represents a material risk to the successful completion of the
summer 2021 development programme. It would also have the effect of
delaying production and reducing initial head grade, with a
consequent drop in early stage revenue.
With approximately C$13 million committed to long lead items to
date, some of which may be recoverable, and approximately C$58
million of cash on hand, the Board has assessed that the fluidity
of both the operational risks and variability in costs is too great
to warrant committing the bulk of the Company's available liquidity
in a timeframe that would permit the Company's current development
schedule to be met. Accordingly, the decision to proceed with the
development has been deferred.
AEX's planned exploration programme, staffed principally by
local contractors and staff, and planned to capitalise on the
recent success of the 2020 exploration programme, is not expected
to be impacted by current COVID related restrictions.
Management is reviewing various scenarios and will commence a
short period of consultation with shareholders and provide an
update in due course.
Eldur Olafsson, CEO of AEX, commented:
"The Board has taken the difficult but ultimately prudent
decision to defer development and gold production from Nalunaq
until such time as the current pandemic subsides and the Company is
able to make an accurate assessment of costs and schedule.
"AEX's intention is unwavering in executing its objective to
maximise value from its vast southern Greenland gold licences. The
potential to add a flotation circuit is an example of adding
significant value through increasing recovery rates. Whilst we
would prefer not to defer the development schedule this is a
necessary action in the context of our current circumstances. We
will now engage our shareholders as part of the process in
developing the forward plan and report to all shareholders in due
course."
Enquiries:
AEX Gold Inc.
Eddie Wyvill, Investors Relations +44 7713 126727
ew@aexgold.com
Eldur Olafsson, Director and CEO +354 665 2003
eo@aexgold.com
Stifel Nicolaus Europe Limited (Nominated +44 (0) 20 7710
Adviser and Broker) 7600
Callum Stewart
Simon Mensley
Ashton Clanfield
+44 (0) 20 3757
Camarco (Financial PR) 4980
Gordon Poole
Nick Hennis
Further Information:
About AEX
AEX's principal business objectives are the identification,
acquisition, exploration and development of gold properties in
Greenland. The Company's principal asset is a 100% interest in the
Nalunaq Project, an advanced exploration stage property with an
exploitation license including the previously operating Nalunaq
gold mine. The Company has a portfolio of gold assets covering 3870
km(2) , the largest portfolio of gold assets in Southern Greenland
covering the two known gold belts in the region. AEX is
incorporated under the Canada Business Corporations Act and wholly
owns Nalunaq A/S, incorporated under the Greenland Public Companies
Act.
Forward-Looking Information
This press release contains forward-looking information within
the meaning of applicable securities legislation, which reflects
the Company's current expectations regarding future events and the
future growth of the Company's business. In this press release
there is forward-looking information based on a number of
assumptions and subject to a number of risks and uncertainties,
many of which are beyond the Company's control, that could cause
actual results and events to differ materially from those that are
disclosed in or implied by such forward-looking information. Such
risks and uncertainties include, but are not limited to the factors
discussed under "Risk Factors" in the Final Prospectus available
under the Company's profile on SEDAR at www.sedar.com. Any
forward-looking information included in this press release is based
only on information currently available to the Company and speaks
only as of the date on which it is made. Except as required by
applicable securities laws, the Company assumes no obligation to
update or revise any forward-looking information to reflect new
circumstances or events. No securities regulatory authority has
either approved or disapproved of the contents of this press
release. Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Inside Information
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
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