Cluff Gold plc
TSX : CFG
AIM : CLF

Cluff Gold plc

January 26, 2011 09:30 ET

Cluff Gold Operational and Strategic Review for 2011

LONDON, UNITED KINGDOM--(Marketwire - Jan. 26, 2011) - Cluff Gold plc ("Cluff Gold" or the "Company") (TSX:CFG)(AIM:CLF), the dual AIM/TSX listed West African focused gold mining company, is pleased to announce a business review for the year ending 31 December 2010 and its outlook for 2011.

HIGHLIGHTS

  • US$32m exploration programme for 2011 focused on both extending mine life and demonstrating sulphide potential at Kalsaka and Angovia; completion of the bankable feasibility study at Baomahun; and extending resource base along strike at Baomahun
  • Cash flow from continuing production will be used to fund and accelerate exploration programme
  • 22% increase in total annual production from both producing mines to over 94,000oz in 2010
  • Strengthening of management team, with Peter Spivey appointed Chief Executive Officer from 1 January 2011, bringing a wealth of experience building and operating gold mines in Africa

2010 has been a transformational year for the Company, generating strong cash flow from increased production. The Company has also advanced its Baomahun Project in Sierra Leone with the release of a positive scoping study, the announcement of a 27% increase in measured and indicated resources to 1.4Moz1 and the launch of a new along-strike exploration programme focused on the results of an airborne versatile time domain electro-magnetic survey ("VTEM survey").

Exploration growth will be the Company's key objective for 2011, with a US$32m budget for exploration costs in the year, including the completion of the Baomahun bankable feasibility study in June 2011. With cash generation from its two producing assets, the Company is able to fund its current planned exploration programmes at all three projects. At Kalsaka and Angovia, the Company's intention is to extend the mine lives by increasing oxide resources and to demonstrate the potential for significant sulphide mineralisation. At Baomahun, the Company is keen to demonstrate the additional exploration upside in the rest of its 136 sq. km licence area, which the management team believes has the potential to become a world class asset. The Company has also acquired four new exploration licences in Eastern Burkina Faso as part of its strategy to build a strong pipeline for future growth.

Importantly, it is in 2011 that the management changes in the Company will be most evident. With the appointment of Peter Spivey as Chief Executive Officer, effective 1 January 2011, the Company is well poised to deliver on the ambitious programme for growth now in place. Peter has over 30 years of industry experience and expertise building and operating gold mines in Africa including his role as Chief Operating Officer of Mineral Deposits Limited where he was responsible for developing the Sabodala Gold Mine in Senegal. His appointment comes at a pivotal time for the Company as it advances Baomahun to feasibility study and construction. Cluff Gold has a strong and experienced management team to develop its assets and unlock their full potential to create further value for shareholders.

Peter Spivey, Chief Executive Officer of Cluff Gold, commented:

"I am delighted to have this opportunity to step into the experienced shoes of Algy Cluff as CEO. This year promises to be an exciting and rewarding time for all the Company's stakeholders, with our significant exploration plans driving the continued growth of the business. By realising the enormous potential of our assets, our aim is to become a new mid-tier West African gold producer, delivering the Company's operational goals in 2011 and beyond."

J.G. Cluff, Executive Chairman of Cluff Gold, commented:

"2010 has been a year of solid growth built on strong fundamentals for Cluff Gold. We are proud to have achieved a significant milestone with our positive operational cash flow, which has allowed us to markedly strengthen our balance sheet. This cash generation is extremely important as we advance Baomahun towards production. Peter Spivey's appointment is a crucial one for the Company. Competition for executives of Peter's calibre and experience is intense and it is a tribute to the Company's potential that he has joined us."

Kalsaka, Burkina Faso

Kalsaka produced over 74,000oz of gold in 2010, a 35% increase from 2009, surpassing the 70,000oz production target set at the start of the year. The strong production was driven by improved overall performance: ore processed increased 36% to 1,550kt in 2010, at an average grade of 1.6g/t. The average grade fell in the second half of the year as activity commenced in new areas of the mine. Grades are anticipated to strengthen at depth during 2011 in these new areas.

With the mining operation performing solidly, the Company's focus is on the exploration potential at Kalsaka. The first phase of an ongoing 63,000m drilling programme included results of up to 11m @ 5.55g/t, as previously announced on 30 November 2010, and has demonstrated the strong oxide potential for mine life extension. More importantly, the ongoing drilling programme has also provided evidence of significant sulphide potential underlying the K-Zone and the East Pit, as demonstrated by results of up to 15m @ 7.44g/t previously announced on 30 November 2010. The Company is highly encouraged by the results to date and believes that the remainder of the drilling programme, together with additional exploration in the wider Kalsaka exploration licence, will demonstrate the true potential of the asset.

The Company is pleased to have been awarded four additional licences located in prospective Birrimian ground in eastern Burkina Faso with a similar geological setting as is found at the Samira Gold Mine in Niger. The award of these licences demonstrates the strength of the Company's relationship with the Burkina Faso government. The licences were selected from a portfolio of available areas due to the strong exploration potential seen on a technical site visit, evidenced by historical stream sediment survey results and gold-in-soil anomalies. An initial exploration budget totalling US$0.7m has been set aside for regional work across these licences, which will be followed up on a results basis as appropriate.

Baomahun, Sierra Leone

The Company is very positive about the enormous potential at its Baomahun Project in Sierra Leone. Results from the scoping study announced in June 20102 suggest that an average of 157,000oz of gold can be produced per annum at an estimated cash cost of US$500/oz and capital expenditure of US$195m.

The Company is quickly advancing the Baomahun Project towards bankable feasibility study, which is due for completion in June 2011, and development thereafter. The Company is confident that much of the inferred resources will be converted to measured and indicated categories through the ongoing 20,000m infill drilling programme. The Company also believes that the feasibility study can improve the economics of the project by focusing on an initial open pit mining scenario, rather than a combination of open pit and underground resources, reducing both capital and operating expenditure. Hydroelectric power options are also currently being explored, which could further reduce the operating costs.

The Company is also focusing on demonstrating the significant upside potential at Baomahun. The existing resource base, consisting of 1.4Moz Au3 in measured and indicated resources and 1.0Moz Au4 in inferred resources, is hosted in an area of approximately 2 sq. km, while the total project licence area is 136 sq. km. In December, seven highly conductive zones were identified as high priority drill targets from the results of an airborne VTEM survey. Each zone is interpreted as having strikes and dips similar to mineralisation in the existing resource area. In addition to the infill drilling that will be done as part of the feasibility work, a 6,000m diamond drilling programme focusing on the new targets will commence imminently, which the Company believes will deliver promising results. A total of five drill rigs will be utilised to achieve these aims in 2011, with two already on site and three additional rigs expected shortly. 

Angovia, Côte d'Ivoire

Angovia produced over 20,000oz of gold in 2010, which was slightly below the 2009 total and remains below the Company's expectations, despite a 10% increase in total ore processed to 812kt. Operational problems persisted during H2 2010, with an unusually heavy and prolonged wet season delaying the commissioning of the crushing circuit that had been expected to allow higher grade ore to be processed. Average grades reduced to 0.9g/t with the higher grade Blangan ore processed in Q4 2009 and H1 2010 being fully depleted and higher grade quartz material not being processed in significant volumes.

Whilst operations have continued during the political unrest in the country, disruptions to critical supplies have had an impact on production. Expected improvements from higher grade transitional ore being mined have been delayed due to a shortage of explosives, whilst other supply disruptions have reduced plant throughput due to increased downtime. The Company hopes that a speedy resolution to these problems will allow production to improve in 2011.

The long term future of the Angovia mine rests with the significant exploration potential in its project area. The immediate goal is to extend the mine life of the oxide operation, and a number of drill targets have been defined. A 31,000m drilling campaign is planned for 2011, although this can only commence once the current political uncertainty has been resolved. The Company believes that the project's true potential lies in its considerable sulphide mineralisation, as demonstrated by drill results of up to 30m @ 3.64g/t below the current pit as previously announced on 8 March 2010.

About Cluff Gold

Cluff Gold is a gold developer-producer with assets in West Africa. The Company generates cash flow from its two producing assets, Kalsaka in Burkina Faso and Angovia in Côte d'Ivoire, which together produce a total of approximately 100,000oz of gold per annum. The Company strives to become a mid-tier producer through the development of its wholly-owned Baomahun project in Sierra Leone, which is expected to contribute an additional 157,000oz of gold per annum, with significant exploration potential along strike. With its experience of bringing new mines into production, the Company aims to further increase its production profile with its highly prospective exploration work at all three projects.

This press release includes certain "forward-looking information" within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact, included in this release, including, without limitation, the positioning of the Company for future success, statements regarding potential future production at Angovia, Kalsaka and Baomhaun, exploration and drilling results at Baomahun, and future capital plans and objectives of Cluff Gold, are forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Cluff Gold's expectations include, among others, risks related to international operations, the actual results of current exploration and drilling activities, changes in project parameters as plans continue to be refined as well as future price of gold. Although Cluff Gold has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Cluff Gold does not undertake to update any forward-looking statements that are included herein, except in accordance with applicable securities laws.

Peter Spivey is a "Qualified Person" within the definition of National Instrument 43-101and has reviewed and approved the information contained within this announcement. Mr Spivey (BSc, AusIMM) is the Chief Executive Officer of the Company.

1 5.5Mt at 2.9g/t totalling 508,000oz in measured resources, and 9.6Mt at 2.9g/t totalling 909,000oz in indicated resources, as announced on 4 June 2010

2 Entitled Technical Review of the Baomahun Gold Exploration Project, Sierra Leone, dated 12 August 2010 as filed on SEDAR

3 Consisting of 5.5Mt at 2.9g/t totalling 508,000oz in measured resources, and 9.6Mt at 2.9g/t totalling 909,000oz in indicated resources

4 Consisting of 12.2Mt at 2.6g/t

NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENT OF THIS PRESS RELEASE.

Contact Information

  • Cluff Gold plc
    J.G. Cluff
    Chairman
    +44 (0) 20 7340 9790
    or
    Cluff Gold plc
    Peter Spivey
    CEO
    +44 (0) 20 7340 9790
    or
    Evolution Securities Limited
    Rob Collins
    +44 (0) 20 7071 4300
    or
    Evolution Securities Limited
    Tim Redfern
    +44 (0) 20 7071 4300
    or
    Pelham Bell Pottinger
    Investor Relations (Global)
    Charles Vivian
    +44 (0) 20 7861 3232
    or
    Pelham Bell Pottinger
    Investor Relations (Global)
    Philippe Polman
    +44 (0) 20 7861 3232
    or
    Farm Street Communications Ltd
    Press Relations (U.K.)
    Simon Robinson
    +44 (0) 7593 340 107
    simon.robinson@farmstreetmedia.com