| Tue 15 Apr 2008, 8:31 | | ARQ/ ANO - Anooraq - Anooraq reports results of Le |
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ARQ
ARQ
ARQ/ ANO - Anooraq - Anooraq reports results of Lebowa technical review
Anooraq Resources Corporation
(Incorporated in British Columbia, Canada)
(Registration number 10022-2033)
JSE share code: ARQ & ISIN: CA03633E1088
TSXV share code: ARQ & ISIN: CA03633E1088
AMEX share code: ANO & ISIN: CA03633E1088
("Anooraq" or "the Company")
ANOORAQ REPORTS RESULTS OF LEBOWA TECHNICAL REVIEW
- Technical Review complete
- 7.7% Increase in Mineral Reserves
- Lebowa Life of Mine plan (100%) indicates Net Present Value (at 7.5%) of ZAR
16.9 billion (CAD2.2 billion)
Anooraq Resources is pleased to announce the completion and results of the
technical review of Lebowa Platinum Mines ("Lebowa") which was undertaken as
part of the due diligence associated with a transaction with Anglo Platinum
Limited ("Anglo Platinum") (see September 4, 2007 news release).
Pursuant to the preliminary transaction agreements announced in September 2007,
Anglo Platinum will sell to Anooraq an effective 51% of Lebowa (currently 100%
owned by Anglo Platinum), and an additional 1% interest in each of the advanced
exploration stage Ga-Phasha Platinum Group Metals ("PGM") Project ("Ga-Phasha"),
Boikgantsho PGM Project ("Boikgantsho"), and the early stage Kwanda PGM Project
("Kwanda"). Anooraq currently holds interests in Ga-Phasha, Boikgantsho, and
Kwanda, by way of 50/50 joint ventures with Anglo Platinum and so would increase
its interests in each of these projects from 50% to 51%. All of these projects
are located in the Bushveld Complex of South Africa. Upon completion of the
Lebowa transaction, it is expected that Anooraq will control the 3rd largest PGM
resource base in South Africa.
Lebowa Operations & Growth Plan
- Lebowa is an operating mine located on the North-Eastern limb of the Bushveld
Complex, to the north of and adjacent to Ga-Phasha.
- Lebowa consists of a vertical shaft and a decline shaft system to access the
underground development on the Merensky (approx. 85,000 tonnes per month
("tpm")) and UG2 Reefs (approx. 45,000 tpm), as well as two concentrator plants.
- Production at Lebowa in 2007(1) was approximately 187,700 refined ounces of
platinum, palladium, rhodium and gold ("4E") from 1.33 million tonnes ("Mt") of
ore milled.
- Anglo Platinum has approved a long term growth plan for Lebowa, which includes
various replacement and expansion projects. Anooraq as a controlling shareholder
supports this growth plan which will result in existing mining operations at
Lebowa increasing in two stages. Technical studies conducted by Anglo Platinum
indicate that Lebowa`s value is maximized at a mining rate of 375,000 tpm,
comprising steady state Merensky production at 120,000 tpm and steady state UG2
production of 255,000 tpm.
- Stage 1 (2008-2013) comprises an expansion of Merensky and UG2 ore
production to 245,000 tpm, with Merensky production being increased to 120,000
tpm, initially from the Brakfontein Merensky decline shaft system and UG2
production being increased to 125,000 tpm, initially from the Middelpunt Hill
UG2 decline shaft system.
- Stage 2 (2016 onwards) sees the further expansion of UG2 production to
255,000 tpm with Merensky production remaining at 120,000 tpm.
(1) Anglo Platinum Annual Report, 31 December 2007.
Anooraq engaged international mining industry consultants to conduct a technical
review of the Lebowa mine. The Mineral Resources and Mineral Reserves have been
reviewed by Snowden Mining Industry Consultants ("Snowden"). A technical report
by independent qualified persons D.B. Gray, Pr.Sci.Nat., and B.C. Rip, Pr.Eng.,
FSAIMM, has been filed on www.sedar.com. The aforementioned qualified persons
have reviewed and approved the technical disclosure in this news release.
This technical review indicates 11.2 million ounces (Moz) of platinum,
palladium, rhodium and gold (4E) in estimated Mineral Reserves at December 2007,
which represents a 7.7% increase in the overall estimated Mineral Reserves
within approved project areas, compared to the estimated Mineral Reserves of
10.4 Moz disclosed in the September 4, 2007 news release. The increase in
Mineral Reserves is attributable to Lebowa`s ongoing drilling and development
program.
The technical review confirmed the following Mineral Reserves and Resources.
December 2007 Mineral Reserves
----------------------------------------------------------------------
4E
4E contained Pt Pd Rh Au
Tonnage grade metal grade grade grade grade
Category (Mt) (g/t) (Moz) (g/t) (g/t) (g/t) (g/t)
----------------------------------------------------------------------
Merensky
Proven 23.1 4.25 3.20 2.62 1.20 0.15 0.28
Probable 5.4 4.06 0.70 2.50 1.12 0.16 0.28
Total Reserve 28.5 4.22 3.90 2.59 1.19 0.16 0.28
UG2
Proven 34.1 5.29 5.80 2.18 2.57 0.44 0.10
Probable 9.4 5.04 1.50 2.11 2.39 0.44 0.09
Total Reserve 43.5 5.23 7.30 2.17 2.53 0.44 0.10
----------------------------------------------------------------------
Notes: The Mineral Reserves stated are for 100% of Lebowa. Anooraq`s
interest would be 51% of the above Mineral Reserves once the
transaction is completed.
Mineral Reserves are exclusive of Mineral Resources.
Tonnes and ounces have been rounded and this may have resulted in
minor discrepancies.
The 4E elements are the sum of platinum (Pt) + palladium (Pd) +
rhodium (Rh) + gold (Au).
Only Measured and Indicated Resources have been converted to
Mineral Reserves.
Mineral Reserves have been determined by applying modifying
Factors to the Mineral Resource.
Mineral Reserves are as at December 31 2007 and will have been
depleted by current mining since December 2007.
The Merensky pay limit (break even) varies between 1.3 and 4.8
g/t
4E across all operations of Anglo Platinum.
The UG2 pay limit (break even) varies between 1.3 and 4.4 g/t 4E
across all operations of Anglo Platinum.
Contained metal in reserve table has recoveries applied.
December 2007 Mineral Resources
-----------------------------------------------------------------------
4E
4E contained Pt Pd Rh Au
Tonnage grade metal grade grade grade grade
Category (Mt) (g/t) (Moz) (g/t) (g/t) (g/t) (g/t)
-----------------------------------------------------------------------
Merensky
Measured 25.0 5.68 4.57 3.65 1.51 0.21 0.30
Indicated 27.4 5.51 4.86 3.46 1.52 0.20 0.33
Measured & Indicated 52.4 5.61 9.43 3.55 1.52 0.20 0.32
Inferred 103.2 5.30 17.58 3.34 1.45 0.20 0.31
UG2
Measured 107.6 6.60 22.84 2.70 3.23 0.55 0.12
Indicated 71.3 6.56 15.32 2.70 3.20 0.53 0.13
Measured & Indicated 178.9 6.58 38.16 2.70 3.22 0.54 0.12
Inferred 145.0 6.61 30.82 2.72 3.23 0.53 0.13
-----------------------------------------------------------------------
Notes: The Mineral Resources stated are for 100% of Lebowa. Anooraq`s
interest would be 51% of the above Mineral Resources once the
transaction is completed.
Mineral Resources are exclusive of Mineral Reserves.
Tonnes and ounces have been rounded and this may have resulted in
minor discrepancies.
The 4E elements are platinum (Pt) + palladium (Pd) + rhodium (Rh)
+ gold (Au).
Oxidised zones and all geological losses have been excluded from
the resources.
Mineral Resources that are not Mineral Reserves have potential
economic viability but have not yet been demonstrated by an
approved mining plan. Measured and Indicated Mineral Resources
are generally located within 650 m depth from surface.
Inferred Mineral Resources are generally located beyond 650 m
Depth from surface.
Cut-off grades of 2.4 to 3.5 g/t 4E depending on reef
characteristics are applied to Merensky Mineral Resource
statements.
A cut-off grade of 1.8 g/t 4E is applied to UG2 Mineral Resource
statements.
No recoveries are applied for contained metal in the resource
table.
Approach of the technical review
Relevant geological information, the interpretation thereof and the estimation
methodology have been reviewed by Snowden.
The reserve estimate takes into consideration all geologic, mining, milling, and
economic factors. Mineral Reserves and Resources are stated according to SAMREC
2007 (South African Code for Reporting of Mineral Resources and Mineral
Reserves) and also comply with Canadian standards (NI 43-101). The capital and
operating costs stated are estimated to a 90% level of accuracy for approved
projects.
The economic analysis undertaken for the technical review used South African
Rand ("ZAR") as the base currency and takes into consideration relevant taxes
and royalties. Royalties are based on the rates prescribed in the third draft of
the proposed Royalty Bill. The resultant effective royalty is 5.4% of revenue.
The technical review used projected metal prices based on analyst consensus
estimates to 2012 resulting in the following average price forecast over the
next five years:
-----------------------------------------------------------------------
Metal Prices long
(US$/oz) 2008 2009 2010 2011 2012 term
-----------------------------------------------------------------------
Platinum Nominal 1,587 1,557 1,556 1,494 1,456
Real 1,544 1,475 1,435 1,341 1,273 1,273
-----------------------------------------------------------------------
Palladium Nominal 384 396 375 379 380
Real 373 375 346 340 332 332
-----------------------------------------------------------------------
Rhodium Nominal 6,589 5,945 5,792 5,560 5,340
Real 6,410 5,631 5,342 4,993 4,669 4,669
-----------------------------------------------------------------------
Gold Nominal 845 856 888 855 847
Real 822 811 819 768 741 741
-----------------------------------------------------------------------
Nickel (US$/lb) Nominal 12.97 11.15 9.48 8.94 9.88
Real 12.62 10.56 8.74 8.03 8.64 8.64
-----------------------------------------------------------------------
Copper (US$/lb) Nominal 3.14 3.18 2.57 2.07 1.91
Real 3.06 3.02 2.37 1.86 1.67 1.67
-----------------------------------------------------------------------
The nominal exchange rates for the first five years are based upon consensus
analyst forecasts. Thereafter the ZAR is estimated to depreciate by 1.07% per
annum, which is the difference between estimated South African Consumer Price
Index (SA CPI) of 3.8% and estimated US CPI of 2.7%. The real assumptions have
been derived from the inflation assumptions presented below.
-----------------------------------------------------------------------
long
Exchange Rate 2008 2009 2010 2011 2012 term
-----------------------------------------------------------------------
US$:ZAR Nominal 7.36 7.72 8.01 8.19 8.57
Real 7.26 7.52 7.72 7.81 8.09 8.09
SA CPI 4.2% 4.0% 3.8% 3.8% 3.8% 3.8%
US$ CPI 2.8% 2.7% 2.7% 2.7% 2.7% 2.7%
-----------------------------------------------------------------------
Certain Indicated and Measured Mineral Resources have been demonstrated to have
economic viability, albeit at a lower level of confidence through pre-
feasibility studies by Anglo Platinum and have been used in the economic
evaluation of Lebowa, in proposed (not approved) projects. An additional 51.9 Mt
grading at 4.49 4E g/t have been converted from the Mineral Resources to Proven
and Probable Mineral Reserves in the proposed project evaluations.
The following are the after-tax results of the technical review in real terms
for the life of mine ("LOM") for 100% of Lebowa:
----------------------------------------------------------------------
Life of Mine 34 years
----------------------------------------------------------------------
Life of Mine Production
----------------------------------------------------------------------
Tonnes Treated 124 Million tonnes
----------------------------------------------------------------------
4E Grade 4.49 g/t
----------------------------------------------------------------------
4E 17.9 Moz
----------------------------------------------------------------------
Pt 8.5 Moz
----------------------------------------------------------------------
Pd 7.7 Moz
----------------------------------------------------------------------
Rh 1.2 Moz
----------------------------------------------------------------------
Au 0.5 Moz
----------------------------------------------------------------------
ZAR/US$ exchange rate 8.09
----------------------------------------------------------------------
----------------------------------------------------------------------
4E Basket Price ZAR/kg 272,144
----------------------------------------------------------------------
Operating Cost ZAR/4E kg 85,512
----------------------------------------------------------------------
Operating Cost ZAR/Tonne 384
----------------------------------------------------------------------
4E Basket Price US$/oz 1,048
----------------------------------------------------------------------
Operating Cost US$/4E oz 329
----------------------------------------------------------------------
----------------------------------------------------------------------
ZAR Million CAD Million
----------------------------------------------------------------------
Gross Revenue 143,414 18,698
----------------------------------------------------------------------
Total Capital Cost 11,029 1,438
----------------------------------------------------------------------
Expansion & Replacement 7,659 999
----------------------------------------------------------------------
Stay in Business 3,370 439
----------------------------------------------------------------------
Operating cost 47,609 6,207
----------------------------------------------------------------------
Gross Profit 95,806 12,491
----------------------------------------------------------------------
Free Cash Flow 54,822 7,148
----------------------------------------------------------------------
Net Present Value (at 5.0% discount rate) 23.747 3,096
----------------------------------------------------------------------
Net Present Value (at 7.5% discount rate) 16,888 2,202
----------------------------------------------------------------------
Net Present Value (at 10% discount rate) 12,553 1,637
----------------------------------------------------------------------
Note: CAD values converted at an exchange rate of 7.67 as at 12 April
2008.
Stay in Business capital is the sustaining capital.
Basket price is total metal value per refined 4E kilogram and
takes into account different ratios of metals for Lebowa.
Sensitivity analysis
Sensitivity analyses were done as part of the technical review. Results in ZAR
and Canadian dollars ("CAD") are summarized in the tables below. The analyses
show that the project is most sensitive to revenue followed by operating cost
and the totals show changes in real LOM operating cost, real LOM basket price
and NPV for the Lebowa mine.
-----------------------------------------------------------------------
NPV7.5 (ZAR Millions)
LOM Real 4E Basket Price ZAR 272,144/4E kg
-20% -15% -10% -5% 0% +5% +10% +15% +20%
-----------------------------------------------------------------------
LOM Real
Operating
Cost
ZAR 384/t
-20% 12,781 14,313 15,846 17,378 18,911 20,443 21,976 23,508 25,041
-15% 12,275 13,808 15,340 16,873 18,405 19,938 21,470 23,003 24,535
-10% 11,768 13,302 14,834 16,367 17,899 19,432 20,965 22,497 24,030
-5% 11,261 12,796 14,329 15,861 17,394 18,926 20,459 21,991 23,524
0% 10,766 12,290 13,823 15,355 16,888 18,421 19,953 21,486 23,018
+5% 10,270 11,783 13,317 14,850 16,382 17,915 19,447 20,980 22,513
+10% 9,774 11,287 12,811 14,344 15,877 17,409 18,942 20,474 22,007
+15% 9,278 10,792 12,304 13,838 15,371 16,903 18,436 19,969 21,501
+20% 8,778 10,297 11,809 13,333 14,865 16,398 17,930 19,463 20,995
-----------------------------------------------------------------------
-----------------------------------------------------------------------
NPV7.5 (CAD Millions)
LOM Real 4E Basket Price CAD 35,482/4E kg
-20% -15% -10% -5% 0% +5% +10% +15% +20%
-----------------------------------------------------------------------
LOM Real
Operating
Cost
CAD 50/t
-20% 1,666 1,866 2,066 2,266 2,466 2,665 2,865 3,065 3,265
-15% 1,600 1,800 2,000 2,200 2,400 2,599 2,799 2,999 3,199
-10% 1,534 1,734 1,934 2,134 2,334 2,534 2,733 2,933 3,133
-5% 1,468 1,668 1,868 2,068 2,268 2,468 2,667 2,867 3,067
0% 1,404 1,602 1,802 2,002 2,202 2,402 2,601 2,801 3,001
+5% 1,339 1,536 1,736 1,936 2,136 2,336 2,535 2,735 2,935
+10% 1,274 1,472 1,670 1,870 2,070 2,270 2,470 2,669 2,869
+15% 1,210 1,407 1,604 1,804 2,004 2,204 2,404 2,604 2,803
+20% 1,144 1,343 1,540 1,738 1,938 2,138 2,338 2,538 2,737
-----------------------------------------------------------------------
Anooraq`s Acting President and CEO, Tumelo Motsisi, comments that, "This
technical review confirms Anooraq`s views on the valuation, superb quality and
potential of Lebowa. Anooraq looks forward to moving ahead with the next steps
in the transaction."
On behalf of the Board of Directors
Tumelo Motsisi, Acting President and CEO
Sandton
14 April 2008
Sponsor
QuestCo Sponsors
Cautionary and Forward Looking Information
This release includes certain statements that may be deemed "forward looking
statements". All statements in this release, other than statements of historical
facts, that address, future production, reserve potential, exploration drilling,
exploitation activities and events or developments that Anooraq expects are
forward looking statements. Anooraq believes that such forward looking
statements are based on reasonable assumptions, including the assumptions that:
the Lebowa acquisition will complete; Lebowa will continue to have production
levels similar to previous years; the planned Lebowa expansions will be
completed and successful; Anooraq will be able to obtain future debt and equity
financing on favourable terms. Forward-looking statements, however, are not
guarantees of future performance and actual results or developments may differ
materially from those in forward looking statements. Factors that could cause
actual results to differ materially from those in forward looking statements
include market prices, exploitation and exploration successes, changes in and
the effect of government policies with respect to mining and natural resource
exploration and exploitation and continued availability of capital and
financing, and general economic, market or business conditions. Investors are
cautioned that any such statements are not guarantees of future performance and
those actual results or developments may differ materially from those projected
in the forward looking statements. For further information on Anooraq, investors
should review the Company`s annual Form on 20-F with the United States
Securities and Exchange Commission and its home jurisdiction filings that are
available at www.sedar.com.
The following are the principal risk factors and uncertainties which, in
management`s opinion, are likely to most directly affect the conclusions of the
study. Some of the mineralized material classified as a measured and indicated
resource has been used in the cash flow analysis. For US mining standards, a
full feasibility study would be required, which would require more detailed
studies. Additionally all necessary mining permits would be required in order to
classify the project`s mineralized material as an economically exploitable
reserve. There can be no assurance that this mineralized material will become
classifiable as a reserve and there is no assurance as to the amount, if any,
that might ultimately qualify as a reserve or what the grade of such reserve
amounts would be. Data is not complete and cost estimates have been developed,
in part, based on the expertise of the individuals participating in the
preparation of the study and on costs at projects believed to be comparable, and
not based on firm price quotes. Costs, including design, procurement,
construction and on-going operating costs and metal recoveries could be
materially different from those contained in the study. There can be no
assurance that mining can be conducted at the rates and grades assumed in the
study. There can be no assurance that these infrastructure facilities can be
developed on a timely and cost-effective basis. Energy risks include the
potential for significant increases in the cost of fuel and electricity, and
fluctuation in the availability of electricity. Projected metal prices have been
used for the study. The prices of these metals are historically volatile, and
the Company has no control of or influence on the prices, which are determined
in international markets. There can be no assurance that the prices of platinum,
palladium, rhodium, gold, copper and nickel will continue at current levels or
that they will not decline below the prices assumed in the pre-feasibility
study. Prices for these commodities have been below the price ranges assumed in
study at times during the past ten years, and for extended periods of time. The
project will require major financing, probably a combination of debt and equity
financing. Interest rates are at historically low levels. There can be no
assurance that debt and/or equity financing will be available on acceptable
terms. A significant increase in costs of capital could materially adversely
affect the value and feasibility of constructing the expansions. Other general
risks include those ordinary to large construction projects, including the
general uncertainties inherent in engineering and construction cost, the need to
comply with generally increasing environmental obligations, and accommodation of
local and community concerns. The economics are sensitive to the currency
exchange rates, which have been subject to large fluctuations in the last
several years.
Information Concerning Estimates of Measured, Indicated and Inferred Resources
This news release also uses the terms "measured resources", "indicated
resources" and "inferred resources". Anglo Platinum and Anooraq advise investors
that although these terms are recognized and required by Canadian regulations
(under National Instrument 43-101 Standards of Disclosure for Mineral Projects),
the U.S. Securities and Exchange Commission does not recognize them. Investors
are cautioned not to assume that any part or all of the mineral deposits in
these categories will ever be converted into reserves. In addition, "inferred
resources" have a greater amount of uncertainty as to their existence, and
economic and legal feasibility. It cannot be assumed that all or any part of an
Inferred Mineral Resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of Inferred Mineral Resources may not form the basis
of feasibility or pre-feasibility studies, or economic studies except for a
Preliminary Assessment as defined under National Instrument 43-101. Investors
are cautioned not to assume that part or all of an inferred resource exists, or
is economically or legally mineable.
FOR FURTHER INFORMATION PLEASE CONTACT:
Anooraq Resources Corporation (South Africa)
Joel Kesler
Head of Business Development
+27 11 883 0831
OR
Anooraq Resources Corporation - North America
Shawn Wallace
Investor Services
(604) 684-6365 or Toll Free: 1-800-667-2114
(604) 684-8092 (FAX)
Website: www.anooraqresources.com
Date: 15/04/2008 08:31:01 Produced by the JSE SENS Department.
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