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DAILY NEWS Nov 20, 2012 7:35 PM - 0 comments

Amara gets a handle on Baomahun

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Amara Mining (AMZ-T) has increased the scope and its understanding of the Baomahun project in Sierra Leone.

The company, formerly known as Cluff Gold, released an updated resource estimate built on a new geological model that re-analyzed the structural controls of gold mineralization at the site.

Benefits to the new interpretation can be seen in the bolstering of mineralized tonnage in the estimate, which were made without taking away much from the deposits high grade core.

The project now has indicated resources of 38.4 million tonnes grading 1.82 grams gold for 2.24 million oz. and inferred resources of 6.6 million tonnes grading 2.52 grams for 540,000 oz. The estimate includes both open pit and underground resources, but the open pit section makes up 85% of the outlined tonnage.

Baomahun's underground potential is connected to the coherent zones of higher grade ore beneath the pit outlines. Amara says such zones would be targeted after mining begins and could offer a high grade ore source that could be blended with lower grade open pit material.

The previous estimate, which was released last year, outlined indicated resources of 25.6 million tonnes grading 2.5 grams gold for 2.06 million oz.

The increase in overall ounces came without any significant sacrifice made to the high grade core of mineralization which is now at 23 million tonnes grading 2.6 grams for 1.92 million oz. in the indicated category. The previous estimate outline 25.6 million tonnes grading 2.5 grams for 2.06 million oz. in the indicated category.

Amara calls the new mode more robust than the previous interpretation with less "smearing" of high and low grade areas while offering a better definition of high-grade shoots.

The market applauded the company's new understanding as its shares climbed 20 cents or 17% to $1.40 after the new resource estimate was released.

Amara's next challenge will be the delivery of a feasibility study on a 2 million tonne per day operation. It plans to have the study done by the first half of next year with the next key steps in the study being the development of a mine schedule that brings high grade ore to the mill early on to speed up payback and the completion of a fiscal stability agreement.

Provided everything goes according to plan Baomahun could be in production by the end of 2015. That timing would afford the company a smooth transition away from its Kalsaka-Sega mine, which would be winding down around that time, into cash flows being generated at Baomahun. The new geological interpretation at the site also has ramifications on the explorations side of things, as Amara says it now has a better understanding of the genesis of the deposit and that has lead to a number of additional near term exploration targets.

The company has outlined five new drill targets within the pit outline, which it says could improve a future mine's overall strip ratio and the average grade of the deposit.

Baomahun is wholly owned by Amara and sits 180-km east of the Sierra Leone capital Freetown. In the mid-1980s, a small heap leach operation was established at the site and an underground drill program got underway in the early 1990s with an adit going into the eastern zone. Further development at the time was halted, however, when the civil war broke out.

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