metallurgical testwork results for konkera, page-17

Good work fishy

AMX - Metwork confirms life of mine recoveries of 84%
Trading Indicator : positive
Posted by Steuart McIntyre on Sunday, January 29 2012, 9:42 PM ET
Ampella Mining Limited (ASX:AMX, A$1.61

Outperform, Speculative Risk; A$3.00 target)

Ampella today released positive results for its metallurgy results at its Konkera gold project in Burkina Faso.

The metallurgy testwork confirmed:

• Overall life of mine recoveries of 84% (RBCe 85% long term)
• Albion Process Could Increase Recoveries to 95%: Preliminary results from a process of sulphide oxidation followed by cyanide leeching known as the Albion process, suggests that sulphide recoveries could potentially be improved to 95%
• A conventional gravity/CIL flow sheet is suitable for treating all oxide and transitional ores as well as the Kouglaga sulphide ore, at modest a grind size of P80 of 106µm, including 30-50% recovery from gravity:
o Oxide Ore: 94-98% recovery
o Transitional Ore: 88-95% recovery
o Kouglaga Sulphide Ore: 98% recovery
• For the sulphide ores at Konkera North and Konkera Main/East, assuming a sulphide float and ultra-fine grinding, the metwork confirmed:
o Konkera North Sulphide Ore: 91% recovery, at grind size of P80 of 10µm
o Konkera Main / East Sulphide Ore: 71% recovery, at grind size of P80 of 8µm
• A breakdown of the component recoveries for the sulphide ores at Konkera North and Konkera Main/East is provided in Exhibit 3 below.

RBC Comment: We regard the confirmation of a life of mine recoveries of 84% at Konkera, as a positive development Ampella. While the ultra-fine grind size of 8-10µm required for the sulphide ores at Konkera North and Konkera Main/East will likely mean higher costs, it is important to note that this ultra-fine grind is only required for the 5-6% of the ore which is floated to a sulphide concentrate – i.e. we expect the overall impact on cash costs will be relatively modest.

In addition, while testing remains at an early stage, the potential to increase recoveries to 95% via the Albion process represents significant potential upside.

Ampella is due to release the results of its PFS at Konkera in the next few months – a key de-risking milestone for the company, in our view. Our key assumptions for Konkera are a US$200m project, producing ~200kozpa at cash costs of ~US$600/oz, over an initial ~10 year life.