Cluff Gold

Cluff Gold plc is focused on the identification, acquisition, development and operation of gold deposits in West Africa that are amenable to open-pit mining and low cost production techniques.

The Group has assembled a portfolio of mineral interests at various stages of development in Côte d’Ivoire, Burkina Faso, Sierra Leone and Mali. In 2008, the construction of two gold mines was completed and gold was first poured at the Kalsaka Gold Mine in Burkina Faso that October and at the Angovia Gold Mine in Cote d'Ivoire that March. At the year end of 2008 both gold mines were in commissioning, Kalsaka then exited commissioning on 30th June 2009, and Angovia exited commissioning on 30th September 2009.

The Group's resource position was significantly increased during 2009 with the announcement of results from further drilling at Baomahun, the Group's flagship gold exploration project in Sierra Leone, where Measured and Indicated resources increased seven fold to over one million ounces bringing the total Measured and Indicated gold resource at Baomahun to 1,103,000 ounces with Inferred gold resources of 957,000 ounces.

The Board, which has considerable experience in developing mining operations across Africa, believes that West Africa remains one of the most exciting regions for gold exploration today.

With Group gold production expected to reach a combined total of 100,000 ounces in 2010 and with the continued exploration of the Baomahun Gold Project, Cluff Gold is well positioned to grow its asset base in the region.

Our Existing Projects

Cluff Gold is a gold developer-producer with assets in West Africa. Its flagship project is its wholly-owned Baomahun Gold Project, a feasibility-stage gold project located 180km east of the capital Freetown in Sierra Leone.  Baomahun is expected to produce 157,000 ounces of gold per annum starting 2013/2014, with significant exploration potential along strike. 

The Company funds its own exploration through internal cash flow generated from its producing asset, Kalsaka (78%) in Burkina Faso, located 150km northwest of the capital Ouagadougou. Fully commissioned in June 2009, it is expected to produce 70,000 ounces of gold per annum.  

The Company also controls the Angovia Gold Project (90%) in Côte d'Ivoire.  This asset is currently on care and maintenance and will remain in this state until Côte d'Ivoire returns to the level of political stability required for restarting operations.

Future Exploration Strategy 

With its historical exploration successes and experience of bringing new mines into production, the Company aims to increase its production profile with its highly prospective exploration work at all three projects.  In addition, the Company continues to exploit a number of its exploration permits throughout West Africa with a view to expanding its portfolio.  

Qualified Person 

Peter Spivey is a “Qualified Person” within the definition of National Instrument 43-101and has reviewed and approved the information contained within these webpages. Mr Spivey (BSc, AusIMM) is the Chief Executive Officer of the Company.

Highlights 

Baomahun is Cluff Gold’s flagship development-staged project in Sierra Leone, wholly owned by the Company. The existing resource base, consisting of 1.4Moz Au in measured and indicated resources and 1.0Moz Au in inferred resources, is hosted in an area of approximately 2 sq. km, while the total project licence area is 136 sq. km. 

The Company has a two-fold strategy for Baomahun: to advance towards production with the current resources while delineating additional ounces along the 12km strike.

A  Preliminary Assessment for the immediate resource area was completed in August 2010 and 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), expected annual production of 157,000 ounces 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%. 

The Company is quickly advancing the Baomahun Project towards bankable feasibility study, which is due for completion in Q3 2011, and development thereafter.  Two drill rigs are currently completing the in-fill drilling programme as part of the feasibility work.  Additionally, hydro-electric power (HEP) has the potential to significantly reduce operating costs and hydrological monitoring is underway as a prerequisite to an HEP feasibility study.  A processing route incorporating a flotation option is also being explored.

As the second branch of the two-fold strategy, the Company is also focusing on demonstrating the significant upside potential at Baomahun, with an initial phase of 6,000 metre diamond drilling programme planned.  In December 2010, seven highly conductive zones were identified as high priority drill targets from the results of an airborne VTEM survey. Each zone is interpreted as having strikes and dips similar to mineralisation in the existing resource area. A trenching programme focused on the seven drill targets is ongoing, with a total of 1,049 metres completed across three targets to date.  

Two exploration drilling rigs have commenced work at the Zone 5 prospect as part of the diamond drilling programme, with an additional rig expected to arrive on site during June 2011 to further accelerate the drilling campaign to a rate of 2,000 meters per month.  Intercepts from the first hole assayed from Zone 5 are as follows: 

• 5 metres @ 1.59g/t from 29 metres 

• 2 metres @ 5.77g/t from 81 metres (including 1m @ 11.1g/t) 

Although the widths and grades are not of themselves comparable with the resources delineated at Baomahun to date, these first results are fundamental to the along strike exploration programme at Baomahun, and support the strategy to follow up on the VTEM survey anomalies. 

From May 2011, the in-fill drill rigs will be used as for diamond drilling work to further accelerate the drilling programme beyond the original 6,000m programme based on drilling results.  A budget of US$22 million has been allocated to Baomahun for 2011 for the completion of the bankable feasibility study at Baomahun and extending resource base along strike at Baomahun.  

Basis for Technical Disclosure 

The technical information contained on this webpage, and more generally contained on this website pertaining to Baomahun, is based on the technical report entitled "Technical Review of the Baomahun Gold Exploration Project, Sierra Leone" dated as of August 12, 2010 and prepared by Dr. John Arthur and Dr. Chris Bonson, who are "qualified persons" (as such term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects) and independent of Cluff Gold plc. 

Highlights

Kalsaka is a producing gold mine in Burkina Faso operated by Cluff Gold (78%). It is expected to produce 70,000 ounces of gold in 2011. 

Kalsaka produced over 74,000oz of gold in 2010, a 35% increase from 2009, surpassing the 70,000oz production target set at the start of the year. The strong production was driven by improved overall performance: ore processed increased 36% to 1,550kt in 2010, at an average grade of 1.6g/t. Grades are anticipated to strengthen at depth during 2011 the operation begins mining in new areas.

As at 31 December 2010, Kalsaka had an estimated 186,000 ounces of proven and probable reserves, at an average grade of 1.7g/t. Inclusive of the mineral reserves, it hosted 402,000 ounces of gold in the measured and indicated categories, at an average grade of 1.6g/t, with an additional 157,000 ounces of gold in the inferred category, in the current mine area. 

An aggressive exploration programme is currently in place to increase its resource base and extend the mine life. Interpretation of geological data collated from historical exploration work has identified several exploration targets located less than 5km from the processing plant, and a 63,000-metre drilling programme is expected to begin shortly. A 20-km regional strike extension contained in the neighbouring Yako license is also being explored. Historical drill data also shows that there is potential for sulphide mineralization below the currently oxide resources, and this will be explored as soon as the near-surface exploration work is completed. 

The other interests in the project are held by the government of Burkina Faso (10% non-dilutable, free-carried) and a local entity IMAR-B (12%). 

Basis for Technical Disclosure 

The technical information contained on this webpage, and more generally contained on this website pertaining to Kalsaka, is based on the technical report entitled "Technical Review of the Kalsaka Gold Mine, Burkina Faso" dated as of October 16, 2008 and prepared by Dr. Mike Armitage who is a "qualified person" (as such term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects) and is independent of Cluff Gold plc. 

Highlights

Angovia is a gold mine located in Côte d’Ivoire owned by Cluff Gold (90%). A former producer previously operated by Compagnie Minière d’Afrique (CMA), Angovia produced 1.9 million tonnes of ore with an average grade of 3.9 g/t gold over five years, but was closed in 2003 due to the prevailing gold price. The mine was acquired by Cluff Gold in 2004, and was fully commissioned in September 2009 under Cluff’s ownership. 

The operation is currently on care and maintenance due to the political situation in-country.  Prior to being put on care and maintenace, the mine produced over 20,000oz of gold in 2010. 

As at 31 December 2010, Angovia had an estimated 81,000 ounces of proven and probable reserves, at an average grade of 1.2g/t. Inclusive of the mineral reserves, it hosted 484,000 ounces of gold in the measured and indicated categories, at an average grade of 1.5g/t, with an additional 63,000 ounces of gold in the inferred category. 

The long term future of the Angovia mine rests with the significant exploration potential in its project area, which would explored when the country returns to political stability. While a number of oxide drill targets have already been defined, the Company believes that the project’s true potential lies in its considerable sulphide mineralisation, as demonstrated by drill results of up to 30m @ 3.64g/t below the current pit.

The remaining 10% interest is held by the Côte d’Ivoire government. 

Basis for Technical Disclosure 

The technical information contained on this webpage, and more generally contained on this website pertaining to Angovia, is based on the technical report entitled "Technical Review of the Angovia Gold Mine, Mount Yaouré, Côte d’Ivoire" dated as of October 16, 2008 and prepared by Dr. Mike Armitage who is a "qualified person" (as such term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects) and is independent of Cluff Gold plc. 

Mamoudouya is an exploration project in Western Mali, owned by Cluff Gold (100%).  The Project is located 300km west of Bamako, the capital city of Mali, in the highly prospective Mali Birrimian Kenieba Inlier Belt, which hosts several world class gold deposits including Randgold’s Loulo Mine (M&I resources of 8.8Moz1) and Gounkoto Project (M&I resources of 3.6Moz2) together with AngloGold Ashanti’s Sadiola Mine (M&I resources of 3.5Moz3).

The Project licence area covers an area of 109 sq. km and has a term of three years, renewable twice for consecutive periods of three years each.  Access is via the newly paved road to Kita, up to the village of Dabia, with tracks on the remainder of the route. 

Geology and Historical Work

The Mamoudouya Project area is underlain by folded epiclastics, flyshic sediments and felsic to intermediate volcanic rocks. Gold is hosted in highly sericitized and silicified sediments and epiclastics in zones of intense veining and stocks. Artisanal gold mining activity along the Falémé River, which crosses the Mamoudouya Permit, provides further indications of gold mineralisation. 

Historical trenching across the 3.6km-long Mamoudouya Shear Zone with a 200+ppb gold-in-soils anomalism, has returned results of up to 24m @ 2.35g/t and 12m @ 2.13g/t. The interpretation of historical airborne geophysics also suggests that Mamoudouya is characterised by crosscutting north-northeast oriented structures deriving from the major Senegalo-Malian Shear; this is a similar structural setting as to that observed at the Loulo and Tabakoto gold mines. A ‘grab sample’ taken on the shear zone has returned results of 8.1g/t.

Since the award of the license, Cluff has completed an initial 650 metres of trenching. Assay results have been received for 205 metres of trenching which include the following intersects above 0.5g/t Au: 

• 40 metres grading 0.7g/t Au including 13 metres at 1.5g/t Au 

• 15 metres at 0.8g/t Au, including 3 metres at 3.6g/t Au 

Project Plans

Cluff Gold has allocated a budget of US$1.5 million for exploration work for the year 2011, with ground geophysics and a trenching programme of 2,000m planned to define initial drill targets. 

Peter Spivey  - CEO

Mr Spivey joined Cluff Gold in January 2010 and was appointed to the Board in June 2010. He is an experienced mine developer and operator with nearly 30 years’ experience. Prior to joining Cluff Gold, he was the Chief Operating Officer of Mineral Deposits Limited, where he was responsible for developing the Sabodala Gold Mine and Grande Côte Mineral sands projects in Senegal. Prior to Mineral Deposits Limited, he was responsible for Placer Dome’s North Mara Project in Tanzania, where he was responsible for the late-staged development and commissioning of the project. Having held a number of other senior positions in Tanzania, Senegal, Indonesia and Australia since 1998, he has had extensive experience in these regions. Peter is based in West Africa, where he splits his time between the Company’s three projects.

Pete Gardner - 

Finance Director

Mr Gardner joined the Group on 1 October 2009. Previously chief finance officer for Alexander Mining plc and corporate finance manager at PKF (UK) LLP, he is a qualified chartered accountant with a breadth of experience in financial management and corporate finance in the natural resources sector. Since joining the Group, he has implemented a number of improvements to the financial reporting systems and procedures. Based in the London office, he travels to West Africa when required.

Updated from company website 25.10.11