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PERTH, Western Australia, Feb. 12 /CNW/ - West African focussed gold developer Adamus Resources Limited (ASX and TSXV: ADU) ("Adamus" or "the Company") is pleased to announce that it has entered into hedging contracts at gold prices that are comfortably more than double projected operating costs at its Southern Ashanti gold project ("Southern Ashanti") in Ghana.
The contracts form part of the financing package for Southern Ashanti, and provide for deliveries totalling 290,000 ounces of gold over the first 5.5 years of operations at US$1075/oz (compared to projected operating costs of US$400/oz in the first 2 years and life of mine operating costs of US$489/oz). Adamus expects to produce approximately 100,000oz of gold each year for an initial 10 years.
The contracts represent 27% of the Company's existing published Ore Reserve (which was calculated at US$900/oz), and less than 14% of its current defined Mineral Resources.
Commenting on the deal, Adamus' Managing Director Mr Mark Bojanjac said, "Our financial projections show that at the hedged gold price, the project could generate approximately US$130M net operating surplus within the first two years of operation. This compares favourably with our current market capitalisation enterprise value of ~A$90 million and effectively underwrites the value of the project and provides for early debt retirement.
"We are on track to commence production within 12 months with construction activities now underway and all key plant and equipment items tendered or ordered. First gold delivery under the hedging contracts is not required until 30 June 2011, several months after our scheduled first production.
"In this volatile market, we have hedged sufficient ore reserves to comfortably secure the profitability of the Project whilst retaining 73% of the existing ore reserve unhedged and available to take advantage of future market conditions."
The hedged price gold delivery program was provided by Macquarie Bank as part of the Company's US$76M finance arrangements.
Adamus Resources Limited is a Perth-based mineral exploration company, listed on Australian Securities Exchange (ASX), TSX Venture Exchange (TSX-V) and Frankfurt Stock Exchange Open Market (FSE).
The Company's primary focus is on exploring, realising and expanding the economic potential of the Southern Ashanti Gold Project in Ghana, West Africa. The Project encompasses approximately 665km(2) of tenure in the Ashanti Gold Belt - host to over 100moz of gold and the Project boasts excellent access to port and road infrastructure. Ghana is a stable West African country with a long history and some of the world's largest gold mining operations. Gold production is vital to the national economy. Members of the Adamus Board and management team have proven records in mineral exploration, project development and project financing.
ADAMUS RESOURCES LIMITED
Information in this announcement pertaining to ore reserves was compiled by Glenn Williamson an employee of Mining Resources Pty Ltd, who is a Member of The Australasian Institute of Mining and Metallurgy. He qualifies as a "Qualified Person" under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Glenn Williamson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a "Competent Person" as defined in the JORC Code. Glenn Williamson consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
Information in this announcement pertaining to mineral resources was compiled by Nic Johnson, an employee of Hellman & Schofield Pty Ltd, who is a Member of The Australian Institute of Geoscientists and has more than 5 years experience in estimation of recoverable resources in gold deposits. He qualifies as a "Qualified Person" under Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Nic Johnson has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a "Competent Person" as defined in the JORC Code. Nic Johnson consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
Neither 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 release.
Caution Regarding Forward Looking Information.
Certain statements included in this announcement, including information regarding Adamus' plans with respect to its mineral properties, constitute forward-looking information. Forward-looking information includes, among other things, statements regarding expected operations. Forward-looking information is based upon a number of estimates and assumptions made by the Company in light of its experience, current conditions and expectations of future developments, as well as other factors that the Company believes are appropriate in the circumstances. While these estimates and assumptions are considered reasonable by the Company, they are inherently subject to business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information provided by the Company, or on behalf of, the Company. Such factors include, among other things, risks relating to additional funding requirements, metal prices, exploration, development and operating risks, competition, production risks, regulatory restrictions, including environmental regulation and liability and potential title disputes. Investors are cautioned that forward-looking information is no guarantee of future performance and, accordingly, investors are cautioned not to put undue reliance on forward-looking information due to the inherent uncertainty therein. Forward-looking information is made as at the date of this announcement and the Company disclaims any intent or obligation to update publicly such forward-looking information, whether as a result of new information, future events or results or otherwise.
For further information: For further information: please see our website: www.adamusresources.com.au or contact: Mark Bojanjac - Managing Director/CEO, +61 8 9322 5943, email: firstname.lastname@example.org; Mark Connelly - Executive Director/COO, +61 8 9322 5943, email: email@example.com; For media enquiries contact: Brian Thornton - Farrington National, +61 2 9332 4448, email: firstname.lastname@example.org