Komet Resources Inc. ("Komet" or the "Company") is pleased to announce that the mining of the underground mineralised gold vein that started less than 6 months ago is now well on track to meet its target of 100 daily tons of mineralised material delivered to the plant each day. The training of local miners has reached a satisfying level, which allowed the drilling and blasting crews to make 3 shifts of 8 hours, 7/7, on a rotational basis since June 1st, in order to ensure a continuous production. Simultaneously, new miner teams dedicated to material-hoisting are gradually being integrated in order to optimize the quantity of material hauled up to the surface every day and thus supply the plant to full capacity. These new developments, the efforts made to upgrade the underground infrastructure during the first quarter 2016 as well as the expertise of our mining engineer with 30 years of experience have resulted in the preparation and development work now being 90% completed.
The gravimetric plant has seen continuous improvements: the energy production has been stabilized with the addition of the new 450 kVA generator unit, the new centrifugal concentrator was delivered and is currently being installed and the ball mill is being connected and put into service. In order to complete the initial phase of the upgrade to the gravimetric recovery circuit, the purchase and installation of a third Knelson concentrator, that will allow maximising gravimetric recovery, as well as an intense leaching reactor (ILR) that will allow processing of the concentrates, is still scheduled for the third and fourth quarters of the current year respectively. It is also worth mentioning other major additions made since the beginning of the current year, including the lab's fire-assay equipment and a new high-performance compressor.
The workforce now totals 150 employees, the majority of which come from the neighbouring communities.
It is important to note that the current production decisions are not based on any preliminary economic assessment or feasibility study, but are a restart of production activities undertaken by the previous owner.
March and April 2016 Production
March and April production of gold doré was about 7 kg, including 4.4 kg in April. Fine gold (24 K) was calculated by the Bureau des Mines et de la Géologie du Burkina Faso (BUMIGEB) to be 6.395 kg prior to export, including 3.987 kg in April. The break-even point of all operations in Burkina Faso is between 3.5 kg and 4 kg of fine gold per month at the current market price. It took less than six months of pilot production to generate a positive cash flow in Africa.
The frequent shutdowns for improvements result in the effective production currently being around 60% of the industry 350-day standard of production per year. Considering the actual new process and equipment, the full capacity target of 150 tons daily is still anticipated for Q4 2016. As of the coming fourth quarter, the Company will be able to quantify the overall real production costs of an ounce of gold extracted from the Guiro Mine.
Since production resumed, gold sales (in Canadian dollars) yielded the following:
- Q3 2015 (VAT leaching only): $171,239
- Q4 2015 (VAT leaching and gravimetry): $366,857
- Q1 2016 (VAT leaching and gravimetry): $383,164
Second quarter production for 2016 will be disclosed next July and should reflect the constant evolution of the mine production.
Private Placement 2016
Komet is expecting to close in the next few weeks a second tranche of the current non-brokered private placement, which can reach a maximum of $5 million. As announced on April 29, 2016, a first closing was done by issuing 1,820,846 units (the "Units") at a price of $0.33 per Unit, for total gross proceeds to Komet of $600,879.13. Each Unit consists of one common share (a "Common Share") and one common share purchase warrant (a "Warrant"). Each Warrant entitles the holder to purchase one additional Common Share of the Corporation at a price of $0.45 for 12 months from the closing date of the private placement (the "Closing Date"). Securities issued under the private placement will be subject to a four-month hold period from the Closing Date. Komet will use the private placement proceeds to fund the acquisition of important production equipment and exploration work on its property.
Interests on Debentures Paid in Shares
A second payment of interests on the debentures issued on June 8, 2015, is planned in the form of shares, at a conversion price of $0.3497 per share, the average of the five days preceding June 1st, 2016, for a total amount of $100,000. Part of the interest payment will be issued to insiders. The total number of shares issued will be 285,953, 85,786 of which will be issued to insiders of the Company.
Jacques Marchand, P.Eng. Geo., is the Qualified Person who has reviewed this news release and is responsible for the geological information presented there.
More information about the Company is available at: http://kometgold.com