Cluff Gold plc

Cluff Gold plc

September 09, 2010 09:30 ET

Cluff Gold plc: H1 2010 Trading Update on Target to Deliver 100,000oz in 2010

LONDON, UNITED KINGDOM--(Marketwire - Sept. 9, 2010) - 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 its trading update for H1 2010.

    Kalsaka, Burkina Faso   Angovia, Côte d'Ivoire   Company
Gold poured (oz)   40,831   11,278   52,109
Average realised gold price (US$/oz sold)   1,150   1,145   1,149
Cash cost excluding royalties (US$/oz sold)   672   837   709
  • Total H1 gold production of 52,109oz, an increase of 56% over H1 2009 as ramp-up and optimisation continue at both Kalsaka and Angovia
  • Total Company production is now at an annualised rate of over 100,000oz
  • On target to meet 2010 estimated production
  • Average realised gold price in the period of US$1,149/oz
  • Average cash cost of US$709/oz, compared to US$865/oz in 2009
  • New crusher on-site and being commissioned at Angovia
  • Baomahun Resource Update released, with Measured and Indicated resources estimated at 1,420,000oz and Inferred resources estimated at 1,030,000oz (at 1.0g/t cut-off)
  • Baomahun NI43-101 Preliminary Economic Assessment completed with positive results

Algy Cluff, Chairman and Chief Executive Officer of Cluff Gold, commented: "I am delighted by the advances made by the Company in 2010. Gold production is now above our estimates at the half year with cash costs continuing to fall compared to 2009. Kalsaka has achieved its best operating performance to date, whilst the new crushing facility now being commissioned at Angovia is expected to have a significant effect on the production profile in the second half of the year. We are confident that we will remain on track to meet our estimated production target of 100,000oz of gold in 2010.

We are also very pleased with regards to the recently updated Resource Estimate and NI43-101 Preliminary Economic Assessment of Baomahun in Sierra Leone. This demonstrates that the asset has the potential to develop into a 150,000 ounce per annum producer that would provide future long term growth for Cluff Gold."

Cluff Gold will announce its interim results for the six months ended 30 June 2010 on Wednesday, 29 September 2010.

Trading Update


In H1 2010, Kalsaka achieved its best operating performance from commercial production to date, producing 40,831oz of poured gold. This is an increase of 55% over H1 2009 and the Company is well on track to exceed its production target of 70,000oz by the end of the year. Total mined tonnage for the period was 779,000 tonnes, with 790,000 tonnes stacked at an average head grade of 1.80 g/t Au.

This operating performance was bolstered by the realised gold price for the period, which averaged US$1,150/oz compared to US$916/oz during the same period in 2009. The average cash cost per ounce in H1 2010 of US$672/oz is significantly lower than the 2009 cash cost of US$767/oz due to increased operational efficiencies. The average cash costs per ounce should further reduce as the operation reaches the average life of mine stripping ratio estimated at 4.9 compared to 6.4 in H1 2010.

Having achieved strong operational performance, the focus of the Kalsaka mine is now turned to an aggressive drilling programme to increase its resource base and extend the mine life, both in the license area and at Yako, a neighbouring satellite deposit.


In H1 2010, Angovia produced 11,278oz of poured gold, an increase of 60% over H1 2009. Total mined tonnage for the period was 486,000 tonnes, with 420,000 tonnes stacked at an average head grade of 1.03 g/t Au.

The cash cost per ounce in H1 2010 was US$837/oz, a 25% reduction compared to the average 2009 cash cost of US$1,113/oz. This cost reduction resulted from an ongoing programme of plant modifications, which led to more efficient utilisation in 2010, together with improved mining performance and ore availability.

One of the operational difficulties at Angovia to date has been the association of the higher grade areas in the ore body with quartz veins. Up until now, these high grade quartz veins have not been processed, resulting in production shortfalls. Following extensive test-work, a crushing facility was acquired and commissioning commenced in August 2010 to allow the recovery of the gold associated with these quartz veins. The Company anticipates payback on the crusher from Angovia free cashflow by the end of 2010. The new crusher is expected to have a positive impact on both production levels and the cash cost per ounce.

In addition, following the successful exploitation of Blangan, a small near-surface lateritic deposit at Angovia which had a significant positive effect on gold production in Q4 2009 and Q1 2010, the Company is currently striving to achieve similar results through the exploration of other neighbouring satellite deposits. Results from the ongoing drilling programme to further increase the resource base and extend the mine life are anticipated in Q4 2010.


Exploration success at Baomahun continued in H1 2010. On 4 June 2010, the Company announced a resource update for Baomahun, with measured and indicated resources estimated at 1,420,000oz (at 2.9g/t Au) and inferred resources estimated at 1,030,000oz (at 2.6g/t Au). 

In August 2010, a Preliminary Assessment in compliance with NI 43-101 was completed, which generated positive results. The Preliminary Assessment was based on a steady state throughput rate of 1.9Mtpa (1.5Mtpa from open pit operation and 0.4Mtpa from underground), an expected annual production rate of 157,000oz per annum, cash cost of US$500/oz and capex of US$195M. At a gold price of US$1,100/oz, this generated a 10% NPV of US$172M and an IRR of 31%.

There is much room for operating cost re-optimisation opportunities at Baomahun to further improve the economics. Good hydroelectric potential is apparent in the general area of Baomahun, which may augment the heavy fuel oil power plant option assumed in the Preliminary Assessment and thereby materially reduce power costs. In addition, the cut-off between open-pit and underground mining is being further investigated as part of the ongoing feasibility study to optimise the project development.

The Company continues to focus on advancing the Baomahun Project towards bankable feasibility study. In achieving this goal, the Company has a US$12M budget for Baomahun for the period to 30 June 2011. This includes an in-fill drilling programme to upgrade resources from Inferred to Measured and Indicated as part of the feasibility study. Long-lead items such as the environmental and social impact assessment (ESIA), hydro-electric power studies and tailings studies have been initiated. It is anticipated that the costs of the feasibility study will be funded out of free cashflow.

The Company is also investigating the significant exploration potential at Baomahun, focussing on the results of the recently conducted VTEM geophysical survey, which will lead to a further exploration drilling programme on defined targets in the remainder of the 12km prospective trend within the licence area.


At 30 June 2010 the Company's cash position totalled US$8.1M, with a US$6M debt facility fully drawn down. As of now, the Company's cash position remains broadly the same.

In conjunction with the technical advances made at its three projects, the Company has also been strengthening its management team, with the appointment of Peter Spivey as Chief Operating Officer, based in West Africa; Pete Gardner as Finance Director; and Catherine Apthorpe as Company Secretary and Commercial Manager. To raise the Company's profile in Sierra Leone, Alusine Jalloh has also been appointed as the Country Manager, based in Freetown.

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 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 Trading Update 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 has reviewed and approved the information contained within this announcement. Mr Spivey (BSc, AusIMM) is the Chief Operating Officer of the Company.

Cautionary Statement:

The Preliminary Assessment is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. There is no certainty that the conclusions reached in the Preliminary Assessment will be realized. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.


Contact Information

  • Cluff Gold plc
    J.G. Cluff
    Chairman and CEO
    +44 (0) 20 7340 9790
    Cluff Gold plc
    Pete Gardner
    +44 (0) 20 7340 9790
    Evolution Securities Limited
    Rob Collins
    +44 (0) 20 7071 4300
    Evolution Securities Limited
    Tim Redfern
    +44 (0) 20 7071 4300
    Pelham Bell Pottinger
    Charles Vivian
    Investor Relations (Global)
    +44 (0) 20 7861 3232
    Pelham Bell Pottinger
    Klara Kaczmarek
    Investor Relations (Global)
    +44 (0) 20 7861 3232
    Farm Street Communications Ltd
    Simon Robinson
    Press Relations (U.K.)
    +44 (0) 7593 340 107