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UPDATE - Aureus Mining reports significant progress with New Liberty construction

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Aureus Mining (LON:AUE, TSE:AUE)  expects to draw down the first tranche of project finance for construction of its New Liberty gold mine in Liberia in April.

The company arranged US$100mln of loan finance at the end of last year with two South African banks and a finance house.

David Reading, Aureus’s chief executive, added that a lot of the preliminary work on the new mine had also now been carried out.

“Significant progress has been made in the construction of New Liberty, with earth moving, bridge and road construction completed, whilst concrete foundation work and steel erection has commenced.” 

Next steps will include installation of the ball mill, completion of the existing village relocation and the finalisation of detailed mining schedules.

Reading added that further exploration of the areas surrounding New Liberty would also be a priority, with a focus on the Ndablama pressure shadow corridor with a phase 4 drilling campaign (50 holes for 10,000 metres) underway to expand the current resource in the first half.

Ndablama is 40 km away from New Liberty. At Weaju, another potential satellite of the new mine, a new drilling programme will test the potential extensions.

“The past financial year saw Aureus secure the required financing and permits to build New Liberty, Liberia's first commercial gold mine.  In addition, the economics of the project have been substantially improved, and the exploration drilling campaign has been highly successful in further identifying a potential new goldfield at Ndablama, with additional drilling to come in 2014 to prove up the inferred resources,” said Reading.

Aureus posted a loss of US$ 7.4mln in 2013 and closed the year with cash of US$39.4mln. 

Broker finnCap, which rates the shares a 'buy', repeated its 81.4 price target and said site work at New Liberty is on track for completion in late 2014 with first gold in Q1, 2015.

Elsewhere, Investec noted that New Liberty was expected to produce 119,000 ounces per year of gold for the first six years at an all in sustaining cash cost of US$850 per ounce and capex of US$136mln.

"AUE has an attractive gold project that is advancing toward production, and fully financed which is impressive in light of the challenging gold market environment over the past year. We look toward updates on the development of the asset to drive further share price movement," added the City firm.

Aureus shares added 3.54% on Thursday to go to 29.25p.

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