Avnel Gold Mining Limited ("Avnel" or the "Company") is pleased to announce that the Environmental and Social Impact Assessment ("ESIA") and the associated Environmental and Social Management Plan ("ESMP") for the development of the Kalana Main Project has been approved by the Malian authorities. Approval of the ESIA was the key government approval required to advance the Kalana Main Project towards the construction phase as the exploitation permit had been granted previously.
"We are delighted to have received approval of the ESIA for Kalana Main, which is a major milestone, as the project is now effectively 'shovel ready'. We continue to advance the project with the goal of being in a position to consider a construction decision this year," stated Mr. Howard Miller, Avnel's CEO and Chairman and the Chairman of Société d'Exploitation des Mines d'Or de Kalana, S.A. ("SOMIKA").
"We wish to thank the government authorities' outstanding attention to rapidly facilitating the ESIA process," stated Mr. Abdoul Karim Maiga, Avnel's In-Country Manager and a director of SOMIKA. "We also thank the Town of Kalana and the surrounding communities for their unwavering support."
Kalana Main Project
On March 30, 2016, the Company reported a summary of the results of a feasibility study for the Kalana Main Project in south-western Mali, West Africa (the "Feasibility Study"). On a 100% ownership basis and utilising a constant gold price of $1,200 per ounce, the Kalana Main Project has an unlevered internal rate of return ("IRR") of 38%, a net present value ("NPV") of $196 million at an 8% discount rate ($257 million at a 5% discount rate), and an undiscounted payback period of initial capital of 1.2 years. All amounts are in United States dollar.
The Proven and Probable Mineral Reserve for the Kalana Main Project is 21.0 million tonnes at an average grade of 2.8 grams of gold per tonne ("g/t Au") containing 1.96 million ounces of gold. The total Measured and Indicated Mineral Resource for the Kalana Main Project is 23.7 million tonnes at an average grade of 4.07 g/t Au containing 3.10 million ounces at a cut-off grade of 0.9 g/t Au.
Avnel has an 80% equity interest SOMIKA, the holder of the Kalana Exploitation Permit, which contains the Kalana Main Project. The Malian Government holds a beneficial interest in the remaining 20% of SOMIKA, which has free-carry rights.
The ESIA is the culmination of more than two years of environmental baseline studies, engineering studies conducted as part of the Feasibility Study, archaeological and cultural heritage studies, water management studies, ecological studies, social baseline studies, and comprehensive community consultations. Additionally, the development of the Kalana Main Project has been overwhelmingly endorsed by the Town of Kalana and the surrounding communities.
The ESIA and other related documentation were submitted to the Malian authorities for review in the first quarter of 2016 and were approved by the Ministry of Environment and Sustaining Development on April 28, 2016. The approval of the ESIA was the key government approval required to advance the Kalana Main Project towards the construction phase as the Kalana Exploitation Permit was awarded to Avnel in 2003 with an initial term of 30 years. The only significant government approval required to develop new mines on the permit is an ESIA and the associated ESMP.
Next Steps on the Path to Production
The Company continues to advance the Kalana Main Project towards a construction decision through its 80% ownership in SOMIKA. The ESIA and related documentation have been prepared to conform to the requirements of the International Finance Corporation's Performance Standards, the World Bank Group's Environmental, Health, and Safety guidelines, and other financial institutions that are signatories to the Equator Principles with the intent of pursuing international financing for the development of the Kalana Main Project. The Company is actively engaged in early discussions with banks, financial institutions, the Company's major shareholders, and other mining companies for this financing.
As a result of these activities, the Company anticipates that the Kalana Main Project will be sufficiently advanced to consider a construction decision during 2016, subject to the availability of adequate financing on a timely basis.
The Company plans to file a National Instrument 43-101 Standards for Disclosure for Mineral Projects ("NI 43-101") compliant technical report in support of the Feasibility Study and the ESIA on SEDAR by no later than May 14, 2016.