Initial Scoping Study Results Evaluating Open-P...

African Consolidated Resources plc / Ticker: AFCR / Index: AIM / Sector: Mining
14 November 2012
African Consolidated Resources plc ('ACR' or 'the Company')
Initial Scoping Study Results Evaluating Open-Pit Mining at Pickstone Gold Deposit

African Consolidated Resources plc, the AIM listed resource and development company focused in Southern Africa, has concluded some initial scoping studies of the Pickstone ore body, a component of the Company's 100% owned Pickstone-Peerless Gold Project in the Midlands Greenstone Belt of Zimbabwe which has a JORC Compliant Resource of 3.2 million ounces ('Moz') (1.6Moz open-pittable at >2.0g/t gold ('Au') and 1.6Moz at >4.0g/t Au underground).  

The scoping studies are an early component of a multi-stage Bankable Feasibility Study ('BFS') process which commenced in October 2012.  The first stage, a preliminary economic assessment carried out by MinXcon (Pty) Ltd in Gauteng, South Africa has focused on open pit opportunities to maximise value in the near-term.  The results show that the deposit can support higher mining cut-offs in excess of the cut-offs applied to the resources estimation.  This development has allowed management to investigate the large-tonnage high-grade open pit opportunity which is likely to generate rapid cash flow with relatively low capital intensity.

There are two pit designs over the Pickstone trend, referred to as Pit-1 and Pit-2. Pit-1 is a sub-set of the larger Pit-2 and the intended exploitation of Pit-1 will not detrimentally affect eventual expansion into Pit-2.  Subject to additional funding, this approach is expected to enable the Company to generate early cash flows to re-deploy into the project, thereby reducing the total capital requirement.  

Note that the ounces targeted for extraction from within these two pit models described are constituent parts of the JORC-compliant Resources declared by ACR in September 2012.

The key indicators emerging from the work on the two pits are described as follows and should be considered a guideline only at this level of development:

Pit-1:

• Mining to a depth of 40 metres over a portion of the Pickstone Trend - intention to extract only the oxide and transition zone ore which benefits from relatively simple metallurgy 

• Total mining target from within Pit-1 of previously declared JORC Resource ounces is 200,000 troz 

• Average grade over life of pit of 3.8g/t Au 

• Average strip ratio of 1:1 

• Cut-off grade of 1.0g/t Au 

• Average grade for first year of production of 6.0g/t Au at average strip ratio of 0.2:1 

• Plant partially complete including leach tanks, new power sub-station, gensets, new elution and carbon re-gen setup and gold rooms, tailings dam (Environmental Impact Assessment ('EIA') approved) and general infrastructure. 

• Mining Licence in place 

• Indigenisation-compliance structuring underway 

• CAPEX to fund the additional plant required will be less than US$10m 

• Capacity of mine and plant c. 20,000 tonnes of ore per month  

• Targeted annual production of c. 30,000troz per annum 

• Cost of mining estimated to be less than US$350/troz 

• Internal Definitive Feasibility Study and design completion in January 2013 

• Timeline post-funding and plant design to first gold-pour anticipated to be 9 to12 months 

• Estimated life of mine at 6 years, but likely to be absorbed into Pit 2 within this period 

Pit 2

• Mining to a depth of 135 metres over a portion of the Pickstone Trend - intention to extract oxide, transition and sulphide ore 

  • Historical results from Rio Tinto (1960s) imply a recovery factor from sulphides of c. 88% before allowance for modern techniques such as ultra-fine grind 

  • Further metallurgical test work to be undertaken during BFS to confirm the historical recovery factors and maximised gold recovery 

• Total mining target from within Pit-2 of previously declared JORC Resource ounces is 800,000troz 

• Average grade over life of pit of 5.0 g/t Au 

• Average strip ratio of 5.6:1 

• Cut-off grade 2.2g/t Au - low grade ore will be stock-piled for end of life processing 

• BFS to investigate the potential to fast track into phase 2 mining 

• Funding, EIA and mining permission to be secured Post BFS and plant design 

• New plant to complement Pit-1 required - additional tailings dam and other expanded infrastructure necessary 

• Mining Licence in place subject to EIA revision 

• Indigenisation structure to be carried forward from Pit-1 

• Additional CAPEX requirement of approximately US$55m - will be partially to be funded by profits from Pit-1 

• Cost of mining estimated to be less than US$450/troz 

• Completion of BFS anticipated mid 2013 

• Timeline post-design and post-funding to first gold-pour expected to be 18 months (target production Q1 2015) 

A similar scoping exercise is underway on the Peerless trend, which lies parallel and 300m north of Pickstone.  Extensive metallurgical studies and processing options have already been carried out at Peerless and the scoping study will optimise mining options based on the recently upgraded JORC Resource on both trends.  Results from the Peerless scoping study are anticipated shortly.

Subsequent work on the BFS for the underground mine are intended commence post BFS conclusion on Pit-2.

Outlook
The Board is encouraged by these figures and will continue briefing the market on an on-going basis with material updates.

The funding of the capital and operating expenditures to develop Pickstone, as envisaged above, is subject to additional finance. In addition and as announced on 30 August 2012, the Company will require additional funding in Q4 2012 in order to both continue operating as a going concern and to develop its portfolio of high impact assets. The Company is in advanced discussions with a number of parties in regards to a range of financing options, including on a project-level basis, although there can be no certainty that funds will be forthcoming.

This announcement has been reviewed by Mike Kellow BSc, a member of the Australian Institute of Geologists and Technical Director of ACR.  Mr Kellow meets the definition of a "qualified person" as defined in the AIM Note for Mining, Oil and Gas Companies.

The technical economic evaluation presented in the study is not based on any JORC compliant Mineral Resource classification and should be considered preliminary in nature. There is no certainty that the economic forecast will be realised. Capital and operating costs are also preliminary in nature and may vary once further metallurgical test-work is undertaken and quotations from suppliers are received.

**ENDS**

For further information visit www.acrplc.com or please contact:

Roy Tucker	African Consolidated Resources plc	[phone] [phone]
Andrew Godber	Panmure Gordon (UK) Limited	[phone]
Callum Stewart	Panmure Gordon (UK) Limited	[phone]
Susie Geliher	St Brides Media & Finance Ltd	[phone]

GLOSSARY OF TECHNICAL TERMS

Term	Explanation	Acronym
archean	One of the four principal eons of Earth history.  The oldest rock formations exposed on the surface of the Earth are Archean (2500-2800 million years) or slightly older and surviving rocks from this eon are mostly metamorphic or igneous.
Au	chemical symbol for gold
CAPEX	capital expenditure
core	cylindrical sample of rock as cut by a diamond drill
diamond drilling	Drilling method using a diamond-impregnated cutting bit to obtain a core sample of rock
greenstone belt	belts of metamorphosed sedimentary and igneous rocks of Archean age
JORC	Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy
lodes	Higher grade portion of mineralised zones, usually with specific orientation
mineralised zones	hydrothermally altered structural features containing potentially valuable minerals
orebody	economically viable portion of a mineralised zone
Resource	mineral resource as defined by the JORC Code 2004
reverse circulation drilling	rotary percussion drilling whereby the sample is returned from the cutting head inside the rod string to surface thereby avoiding contamination from the walls of the hole	RC
strip ratio	ratio between the volume of total waste material and the volume of gold bearing ore
sulphide	sulphur bearing metallic mineral
tenement	an area encompassing a number of blocks of claims
UNITS
cm.g/t	centimetre grams per tonne - metal content expressed as grade times thickness
g	gramme
g/t	grammes per metric tonne - metal concentration
ha	hectare
kg	kilogramme, a thousand grammes
km	kilometre
koz	thousand ounces
kt	thousand metric tonnes
kv	thousand volt
kva	thousand volt amperes
m	metre
mm	millimetre
µm	micron, or millionth of a metre
Mt	million metric tonnes
Moz	million ounces
oz	fine troy ounce equaling 31.1048 grammes - normal unit used in selling gold
ppb	parts per billion
ppm	parts per million, equivalent to g/t
t	metric tonne
t/m3	density measured as metric tonnes per cubic metre
troz	troy ounce
°	degrees

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