Cluff Gold PLC
AIM : CLF
TSX : CFG

Cluff Gold PLC

June 27, 2011 09:30 ET

Cluff Gold PLC: AGM Statement

TORONTO, ONTARIO--(Marketwire - June 27, 2011) - Cluff Gold PLC (AIM:CLF)(TSX:CFG) ("Cluff Gold" or the "Company"), the dual AIM/TSX listed West African focused gold mining company, announces that the Company's Annual General Meeting ("AGM") is to be held today at St Stephen's Club, 34 Queen Anne's Gate, London SW1H 9AB at 10:00 a.m. on 27 June 2011.

The Chairman, Algy Cluff, will provide the following update to shareholders:

Ladies and gentlemen welcome to our AGM. Apart from commenting on our activities during the past twelve months it so happens that tomorrow your board will be embarking on our annual strategy meeting, so I will also endeavour to share with you what we judge to be the salient issues to which we must address our attention.

Firstly to the past. Overall our performance can be fairly summarised as satisfactory. In particular we have made significant progress in the production of the Bankable Feasibility Study of the Baomahun project in Sierra Leone. The final document will be ready in three and a half months time and we expect its findings to affirm that Baomahun is a robust operation which will, de minimis, yield an annual production of 157,000 ounces per annum for eight years at an operating cost per ounce in the region of US$500. I say de minimis because we have importantly embarked on a drilling programme to conduct exploration over the 75% of the licence area which has yet to be explored. Three drill rigs are now engaged in this process and the initial results will begin to be available before the end of July. From a political standpoint Sierra Leone continues to be calm with much inward investment in mining, agriculture and tourism.

In my Chairman's statement in the 2010 Annual Report which you have, I referred to the febrile state of much of African politics and we experienced our share of that recently in the Ivory Coast, where a stand off between the two Presidential contenders led to a virtually sclerotic collapse of the system rendering it impossible to obtain the supplies, not to mention the cash to sustain our small Angovia mine. Our future in that country is likely to focus on the underlying sulphide system which holds out great hope for a future mine of some consequence and we shall be applying part of our US$32 million exploration budget to the Angovia licence, subject to our agreeing a working formula with the new administration. Angovia is blessed by reason of its proximity to the largest hydro-electric dam in that part of West Africa with benevolent implications for the cost of power.

In Burkina Faso where we operate the Kalsaka mine we have also had to deal with an aspect of the febrile factor; in this case industrial action – now happily resolved – predominantly due to chronic food inflation although there were other factors. This situation resulted in a loss of about three weeks' production. I am pleased to say that at the time we were ahead of budget so the stoppage has made no impact on forecast production of 70,000 ounces this year. This equates to a free cash flow of approximately US$35 million, sufficient to cover the majority of our expected costs of exploration, the Bankable Feasibility Study and our G&A in 2011. As in Sierra Leone, the Ivory Coast and Mali, exploration at the Kalsaka mine will see us committing US$6 million to a programme designed to extend the life of our mine.

The strategy meeting to which I referred has a number of facets but will primarily address the issue of capital funding, primarily of course the raising of the US$195 million required to develop the Baomahun mine. It must be borne in mind that although that may sound a daunting figure in relation to our market capitalisation of just over US$200 million, the providers of finance are increasingly imaginative and the level of our equity contribution could be significantly eased through the use of alternative financing structures together with more conventional project finance. The company continues to review all options in respect of this financing.

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, statements concerning the progress and expectations concerning the findings of the Definitive Feasibility Study of the Baomahun project, anticipated production at the Kalsaka mine, expected costs in 2011, the development plans at Baomahun as well as increases in resources anticipated at the Company's various projects, 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.

Operating cost per ounce includes all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, on-site general and administrative costs, royalties and mining production taxes. Operating cost provides management and investors with an indication of net cash flow, after consideration of the realized price received for production sold. Management also uses this measurement for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Operating cost per ounce is a measure developed by precious metals companies in an effort to provide a comparable standard; however, there can be no assurance that our reporting of this non-IFRS measure is similar to that reported by other mining companies. Cost of sales and other direct production costs and depreciation, depletion and amortization, is the most comparable financial measure calculated in accordance with IFRS to operating cost per ounce. The sum of the cost of sales and other direct production costs and depreciation, depletion and amortisation for our projects can be found in Note 1to Cluff Gold's 2010 Annual Report as filed on SEDAR.

Similarly, free cash flow is also presented as additional information since management believes it is a useful indicator of the Group's ability to meet financial commitments and to invest in new strategic opportunities and strengthen its balance sheet, without reliance on additional borrowing or usage of existing cash. Free cash flow is a measure of the net cash generated that is generated from its operations, net of any capital expenditure investments, available for working capital uses. Free cash flow is a non-IFRS financial measure, which means it should not be interpreted as a measure determined under IFRS, nor as a substitute measure for cash flow from operating activities as determined under IFRS.

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

Contact Information

  • Cluff Gold PLC
    J.G. Cluff
    Chairman

    Cluff Gold PLC
    Carrie Lun
    Investor Relations Manager
    +44 (0) 20 7340 9790

    Pelham Bell Pottinger
    Lorna Spears
    Investor Relations (Global)
    +44 (0) 20 7861 3232

    Pelham Bell Pottinger
    Philippe Polman
    Investor Relations (Global)
    +44 (0) 20 7861 3232

    Evolution Securities Limited
    Jeremy Ellis
    +44 (0) 20 7071 4300

    Evolution Securities Limited
    Tim Redfern
    +44 (0) 20 7071 4300

    Farm Street Communications Ltd.
    Simon Robinson
    Press Relations (U.K.)
    +44 (0) 7593 340 107
    simon.robinson@farmstreetmedia.com