Mwana Africa : Quarterly update

Mwana Africa is pleased to provide an update on operations and exploration activity for the quarter ended 30 June 2015.

• Tonnes milled decreased by 0.3% to 293,759t in Q1 FY2016 compared to 297,953t in Q4 FY2015, mainly due to a 1% decrease in mill running time
• The average feed grade for Q1 FY2016 increased by 11% from 1.81g/t in Q4 FY2015 to 2.03g/t
• Gold recovery rate for Q1 FY2016 declined by 1% to 82% from 83% in Q4 FY2015
• 16,985 ounces (oz) of gold were produced in Q1 FY2016 against 13,443oz in Q4 FY2015. The production increase was mainly attributable to the 11% increase in the mill's average feed grade
• C1 cash costs were 25% lower in the quarter under review at US$930/oz from US$1,234/oz in Q4 FY2015 largely because of an increase in ounces produced and a 5% reduction in operating costs. All-in sustaining costs were cut by 24% to US$1,093/oz from US$1,429/oz in Q4 FY2015.
• The average gold price received in Q1 FY2016 was 3% lower at US$1,186/oz compared to US$1,223/oz in Q4 FY2015

• Production of nickel in concentrate dropped by 34% to 1,349t compared to 2,032t in Q4 FY2015, primarily due to a reduction in average head grade and recoveries
• Head grade was 26% lower at 1.2% compared to 1.67% in Q4 FY2015 due lower production of massive ores areas compared to the previous quarter
• Recovery was 3% lower at 84% against 86.9% in Q4 FY2015
• The average net realized nickel in concentrate price dropped by 11% to US$8,461/t compared to US$9,489/t in Q4 FY2015
• Nickel sales were 39% lower at 1,267t compared to 2,072t in Q4 FY2015 due to lower production
• C1 actual cash costs of nickel in concentrate rose 29% to US$8,901/t from US$6,926/t Q4 FY2015, and actual all-in-sustaining costs of nickel in concentrate rose by 35% to US$9,736/t in the quarter under review from US$7,209/t in Q4 FY2015 as a result of lower production and refurbishment of equipment

• Klipspringer's throughput of Marsfontein fine residue tailings fell to 38,760 tonnes which was 10% lower than in Q4 FY2015
• Head grade improved by 8% to 44 carats per hundred tonnes (cpht). Mining continued through a transition zone so as to access higher grade material
• Diamond sales fell by 45% quarter-on-quarter
• The price received for fine diamonds produced by the mine fell by 7% quarter-on-quarter. This was in line with market conditions, which are expected to remain constrained.

• Field mapping was completed in the Godawiza and Djalasega areas. Exploration activity has now moved to the Kepira and Kodo West areas where prospective lithologies and structures have been identified.

• Fieldwork, including mapping, soil sampling and drilling, has been initiated by JV joint-venture partner Hailiang on five priority target areas.

Yat Hoi Ning, Mwana's Executive Chairman, commented:
The past quarter has not been without its challenges, but I am pleased to say that they have been addressed progressively and appropriately. Our main challenges have been external, particularly those of falling commodity prices. However, I remain confident that we can manage and counter the effects of lower prices by operating effectively and economically.

At Freda Rebecca the average gold price received was US$1,186/oz, its lowest in several quarters. But we countered the adverse effect by producing more gold which, in turn, contributed to a significantly lower cash cost of US$930/oz and an all-in sustaining cost of US$1,093/oz. This means the mine remains operationally profitable and will be maintained in that state.

At Bindura Nickel's Trojan mine, operations continued to be hampered by the continued upgrading of equipment; upgrading that will ensure there are fewer interruptions in future. Underground development work has proceeded more slowly than had been planned, but with the redeep project now scheduled for completion in October 2015, the current financial year's second half should see considerable operating improvements that will be followed by the benefits of the smelter restart.

Work on the restart is proceeding on schedule and, when completed, will result in our receiving enhanced prices for the nickel contained in our products. During the quarter under review underground operations were affected by temporary poor availability of ore draw points which resulted in lower utilisation of equipment and increases in underground transport equipment. The result was slower mining rates, though these should improve sharply during the current quarter.

At our Klipspringer diamond joint venture revenues were affected by the lower diamond prices that have been affecting all diamond producers. The processing plant, which recovers gems from old slimes tailings, suffered temporary technical problems which lowered production, but this is expected to be resolved in the current quarter.

In line with the company's determination to limit expenditure, prospecting work with our partners in the DRC has been contained. It has been restricted largely to field work designed to locate further exploration targets and to improve our knowledge of those already delineated.

Overall costs were tightly controlled in the quarter under review, and this will continue well into the future. It is far from clear when commodity prices will improve from their currently depressed levels, but our operations remain cash-flow positive and our capital programmes will remain on track.

Operations and exploration update for the quarter ended 30 June, 2015 (PDF - 480KB)

Mwana Africa PLC
Yim Kwan, Finance Director
Amilha Young, Group General Counsel and Company Secretary Tel: + 44 (0) 203 696 5470

Public and investor relations
Russell and Associates (South Africa)
42 Glenhove Road, Melrose Estate, Johannesburg, South Africa
Tel: +27 (0) 11 880 3924
Leigh King: email: leigh@rair.co.za
Jim Jones: email: jim@rair.co.za

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