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Aureus Mining Inc
Symbol C : AUE
Shares Issued 221,440,668
Close 2013-08-02 C$ 0.495
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Aureus loses $600,000 (U.S.) in Q2

2013-08-06 08:22 ET - News Release

Mr. David Reading reports

AUREUS MINING INC. - FINANCIAL RESULTS FOR Q2 2013 AND H1 2013 OPERATIONAL UPDATE

Aureus Mining Inc. has released its second quarter 2013 financial results for the three-month period ended June 30, 2013, and has provided an operational update for the first half of 2013.

Construction continues at Aureus's 100-per-cent-owned New Liberty gold project in Liberia with first gold pour expected in fourth quarter 2014.

Highlights

Debt financing

  • Nedbank Capital and Rand Merchant Bank (RMB) mandated to arrange a project debt finance facility for New Liberty, as announced on March 20, 2013.
  • The banks have completed a detailed due diligence review. Credit committee approvals are expected mid-third quarter 2013.
  • Loan documentation is targeted for fourth quarter 2013 with the first drawdown anticipated by year-end.

Financial

  • Cash and cash equivalents as at June 30, 2013, were $53.9-million (U.S.).
  • Total assets as at June 30, 2013, were $152.3-million (U.S.).
  • Loss for the quarter was June 30, 2013, of $600,000 (U.S.).
  • The company incurred $18.0-million (U.S.) of New Liberty capital cost estimate to date.

New Liberty gold project

  • A definitive feasibility study (DFS) was announced on May 20, 2013:
    • A robust NPV (net present value) of $230-million (U.S.) and IRR (internal rate of return) of 29 per cent at a flat gold price of $1,400 (U.S.) per ounce;
    • Life-of-mine (LOM) operating cash cost to average $668 (U.S.) per ounce using contract mining;
    • Initial capital cost estimate of $136-million (U.S.) (excluding contingency of $13.6-million (U.S.));
    • New Liberty to be the first commercial gold mine in Liberia and to produce an average of 119,000 ounces per year at 3.6 grams per tonne (g/t) for the first six years;
    • Plant commissioning and first gold pour scheduled for December, 2014;
    • National Instrument 43-101-compliant proven and probable reserve estimate of 924,000 ounces (8.5 million tonnes grading 3.4 g/t).
  • The New Liberty project DFS optimization process has been completed. A number of changes have been outlined including relocation of the tailings storage facility (TSF) and plant, now located south of the pit. Waste rock dumps have been redesigned to wrap around the pit. The process plant has been redesigned to incorporate additional grinding and reduction in reagent consumption. The Marvoe Creek diversion channel (MCDC) has accommodated a natural depression minimizing excavation. The open-pit design now incorporates new geotechnical data and latest operating costs. The outcome of this work is that the project will be easier to operate than previously envisaged with less environmental risk.
  • The ball mill order, the project's key long lead item, was placed in May, 2013, with delivery expected in May, 2014.
  • The construction phase commenced in December, 2012, and progressed throughout the first half of 2013, specifically in respect of the early earthworks. Bulk excavation has been completed at the MCDC and is progressing at the plant site with the shaping of the plant access road and the terracing for the primary and secondary crusher facilities.
  • The Kinjor village relocation is in progress and the new site has been cleared and topsoil removed. The church and school buildings are being built and brick making for housing construction is under way.
  • All key permits in place following receipt of environmental permit in October, 2012, and the community development plan (CDP) approval in March, 2013.

Exploration

  • Completion of phased drilling campaigns at Weaju and Ndablama (both within Aureus's 100-per-cent-owned Bea Mountain mining licence) and focused on regional soil and stream sediment geochemical programs which cover the whole licence portfolio of 546 square-kilometres; exploration work now stopped due to the onset of the rainy season.
  • Weaju gold target:
    • Drilling to date has outlined three zones (Main, North and Creek Ridge) of mineralization with a cumulative strike length of one kilometre. In each zone, gold mineralization is focused within Westerly plunging bodies which are traced from surface to shallow depths of 80 metres. Over 9,000 metres of drilling (62 holes) has been completed in the first half of 2013 and the following high-grade shallow intercepts are highlighted:
      • 10.0 g/t over 7.5 metres from 0.2 m;
      • 9.1 g/t over six m from 47.3 m;
      • 6.9 g/t over 8.7 m from surface;
      • 6.6 g/t over nine m from 114.4 m;
      • 5.6g/t over 14.0 m from 39.0 m;
      • 4.6 g/t over 11.3 m from 13.9 m;
      • 2.5 g/t over 19.0 m from 24.0 m;
      • 3.7 g/t over 11.0 m from 36.0 m;
      • 5.5 g/t over 6.6 m from 12.9 m;
      • 3.8 g/t over nine m from 78.0 m.
    • Mineralization is still open in all directions. At the Main zone soil geochemistry and pitting have outlined a potential southwest extension of one kilometre. Soil work and trenching also highlight a potential westerly extension to the North zone and an easterly extension to the Ridge and Creek zones. All zones are still open at depth. To date only 50 per cent of the anomalous gold areas have been drill tested.
  • Ndablama gold target:
    • A 2,330-metre 18-hole phase 3 drilling program highlighted multiple shallow intercepts which included:
      • 4.1 g/t over 43.0 m from 78.0 m;
      • 4.3 g/t over 27.0 m from 70.0 m;
      • 2.6 g/t over 18 m from 89 m;
      • 2.5 g/t over 18 m from 52 m;
      • 2.4 g/t over 17 m from 68.0 m;
      • 2.3 g/t over 15.0 m from 83.0 m;
      • 9.7 g/t over 14.0 m from 78.0 m;
      • 5.5 g/t over 12.0 m from 51.0 m;
      • 16.7 g/t over 11.0 m from 108.0 m;
      • 2.2 g/t over 10 m from 66.0 m;
      • 3.4 g/t over nine m from 67.0 m.
    • Current and historic drilling and trenching at Ndablama have outlined a total of approximately one kilometre of continuous gold mineralization in three north-trending zones which dip shallowly to the west.
    • Ndablama is located within a 13-kilometre belt of gold-in-soil anomalies which straddles a granite-greenstone contact zone. Six gold targets have been subject to follow up exploration programs and drilling has intersected high-grade gold mineralization at three of these referred to as Gondoja, Ndablama and Leopard Rock. To date less than 15 per cent of the potential strike length has been drill tested.
  • Following the completion of the soil geochemistry programs covering the complete licence portfolio, a generative study is in progress to define additional target areas.
  • Batouri licence in Cameroon has been subjected to trenching and pitting programs and results are pending.

Outlook -- key targets for the second half of 2013

  • Bank financing -- seek bank credit committee approvals, complete loan documentation in third quarter/fourth quarter 2013 with first drawdown of funds in late fourth quarter 2013;
  • Complete the following New Liberty development milestones:
    • MCDC;
    • Kinjor village relocation;
    • Plant earthworks.
  • Commence the following development activities:
    • Civil construction;
    • TSF earthworks.
  • Exploration:
    • Define new resources at Weaju and Ndablama;
    • Generative study to define new targets in Liberian licence portfolio.

Commenting on the results, David Reading, president and chief executive officer of Aureus, said: "Aureus has made significant progress in the first half of 2013 despite the economic downturn for gold companies. The completion of the optimized DFS and the commencement of the construction phase at New Liberty have ensured we are well on our way to achieving our strategic goals for 2013, as well as smoothly and rapidly transitioning the company from explorer to developer. Our discussions with the mandated banks continue to be constructive, with detailed due diligence concluded and the financing process for the completion of credit approval nearing completion.

"Our successful exploration campaigns highlight the prospectivity and long-term project pipeline across the wider licence area. At Weaju and Ndablama we have achieved exciting high-grade, near-surface results which bode well for future developments both in terms of satellite feed for New Liberty and for a new stand-alone second gold project. In all cases the geology of the mineralized systems is very similar and good grades are a strong characteristic of these gold belts which underpins the significant future opportunities within our sizable licence area.

"To have achieved so much in such a short period of time demonstrates the commitment, endeavour and support the company receives from its shareholders, board, management and employees. I would like to thank everyone for their hard work and I look forward to Aureus becoming one of West Africa's newest gold producers."

The financial statements and the accompanying management's discussion and analysis for second quarter 2013 are available for review at the company's website as well as on SEDAR and should be read in conjunction with this press release.

Qualified person

The estimates of mineral resources for the DFS were calculated in accordance with NI 43-101 and carried out by Chris G. Arnold, BSc (honours), MSc, MAusIMM (CP), of independent consultant AMC. The reserve study for the DFS was prepared by M. Staples of AMC, a qualified person, for the purposes of the study, under the standards set forth by National Instrument 43-101 -- standards of disclosure for mineral project -- of the Canadian securities administrators.

The company's qualified person responsible for preparing this release, other than as detailed above in respect of the DFS, is Mr. Reading, who holds an MSc in economic geology from University of Waterloo, Canada, and is a fellow of the Institute of Materials, Minerals and Mining. Mr. Reading is the president and chief executive officer of Aureus Mining and consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears and confirms that this information is accurate and not false or misleading.

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