TIDMPGD
RNS Number : 2627E
Patagonia Gold PLC
05 May 2017
5 May 2017
Patagonia Gold Plc
("Patagonia Gold" or the "Company")
Operations Update
Patagonia Gold Plc (AIM:PGD), the mining and development company
with gold and silver projects in Argentina, Chile and Uruguay, is
pleased to provide an update on its operations, including in
respect of its Cap-Oeste project and its exploration assets.
Cap-Oeste
As previously announced, following higher than anticipated clay
content in the ore, the Company is currently installing an
agglomeration unit at its open pit mine and heap leach processing
facility at Cap-Oeste, and good progress is being made in this
regard.
All civil works and liner installation for the expanded heap
leach area and agglomeration unit have been completed and several
main components including cement silos, generator, stacking
conveyors and electrical infrastructure are all on site and in
place for the arrival of the agglomerator and the main KLEEMANN
crushing unit. The main agglomeration unit from WESTPRO
International has now been shipped and is scheduled to arrive in
Argentina next month. Set-up and installation are then expected to
take a further three weeks from the date of arrival and
commissioning is now expected in early July, with the first ore to
be treated immediately thereafter.
Existing ore on the pad will be re-handled and agglomerated in
parallel with ore being mined from the open pit. Production
guidance for 2017 from Cap-Oeste remains as previously announced at
68,500 oz AuEq from the heap leach.
The Company also continues to evaluate the previously announced
pit expansion at Cap-Oeste which has the potential to increase
overall production to 186,800 oz AuEq and to increase the mine life
from two to three years, subject to a further investment of
approximately US$2.5 million in machinery together with an increase
in staff and related infrastructure.
Other projects
The Company continues to carry out exploration work on its
portfolio of properties and is currently focused on Sarita and
Manchuria in Argentina and San Jose in Uruguay. A detailed
geophysics programme over Manchuria and Sarita is continuing with
final targeting under way before drilling in the second half of
2017. High grade, low sulphidation is the primary target contained
within an extensive package of veins with mapped outcropping strike
lengths of over 12km. A further announcement will be made on
results as and when they are received.
The Lomada operation is still producing approximately 15 oz Au
per day and the Company will continue irrigating the pads for as
long as the process remains viable.
COSE disposal
As announced on 25 April 2017, the Company has agreed to dispose
of its Cap-Oeste Sur Este (COSE) deposit, which is located
approximately 1km from the Cap-Oeste main orebody (which, as
detailed above, the Company continues to own and to mine), to a
subsidiary of Pan American Silver Corp. ("Pan American Silver") for
a total consideration of US$15 million, of which US$7.5 million is
payable on completion, expected to be on or around 31 May 2017, and
US$7.5 million is deferred, plus a 1.5% net smelter returns
royalty.
COSE is a high grade underground deposit and given its high
grade, it will be more appropriate to treat the ore through a
conventional plant in order to realise better recoveries than heap
leaching could achieve. In light of the financing required to
develop the COSE underground mine and the associated processing
facility, the Company agreed to dispose of COSE to Pan American
Silver, which will be able to treat the COSE ore at its Manantial
Espejo processing plant.
Pan American Silver recently reached an agreement with Coeur
Mining on a neighbouring property - Joaquin - for similar strategic
reasons. In closing this acquisition with Patagonia Gold, it is
important to note that Pan American Silver will only have control
over the mineral rights of a total of 51 hectares, which
incorporates the COSE underground deposit. It will not have any
rights to any other resources or exploration ground the Company
holds within its 81,000 hectare El Tranquilo land package,
including the Cap-Oeste deposit.
Calcatreu Option
As announced on 25 April 2017, Patagonia Gold also entered into
an exclusive option agreement with a subsidiary of Pan American
Silver to acquire the Calcatreu gold-silver asset in Rio Negro
Province, Argentina for US$15 million ("Calcatreu Option"). Under
the Calcatreu Option, which is exercisable at the discretion of
Patagonia Gold, the Company will have six months to exercise the
option, during which time it will undertake and complete due
diligence on the project. This will entail a full resource
recalculation mining study and some first pass exploration,
including drilling, to identify any upside potential in the
immediate vicinity of the existing resources.
The Company believes that the Calcatreu Option presents an
excellent opportunity to acquire a significant asset with
approximately 1 million oz AuEq (combined indicated and inferred
resources as per Canadian National Instrument 43 101 compliant
resource based on metal prices of US$12.50/oz Ag and US$650/oz Au
at the time of the mineral resource estimate by Micon International
Limited of Toronto in 2008) together with exploration upside. From
test work and analysis completed to date, the metallurgy for
Calcatreu has shown excellent recoveries of gold and silver when
treated with industry standard cyanide leach technology.
Patagonia Gold's objective as a junior miner is to achieve
annual production of 100,000 oz AuEq over a mid to long term mine
life. The Company believes Calcatreu offers this opportunity with a
modest capital cost. Due diligence is under way and will be
completed within the six month option period.
About Patagonia Gold
Patagonia Gold Plc is a mining company that seeks to grow
shareholder value through exploration, development and production
of gold and silver projects in the southern Patagonia region of
Argentina. The Company is primarily focused on production at
Cap-Oeste and exploration at Sarita, La Manchuria and the earn-in
agreement in Uruguay. Patagonia Gold, indirectly through its
subsidiaries or under option agreements, has mineral rights to over
220 properties in several provinces of Argentina, Chile and
Uruguay.
Shareholders are encouraged to register with our mailing list on
our webpage:
http://www.patagoniagold.com/investors/subscribe-to-news/ to
receive the Company's announcements.
Matthew Boyes, (BSC. Geology, Fellow AusIMM) Chief Operating
Officer for Patagonia Gold PGSA and a qualified person as defined
in Canadian National Instrument 43-101, has reviewed and verified
all scientific or technical mining disclosure contained in this
press release.
The information contained within this announcement is deemed by
Patagonia Gold to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
For more information, please contact:
Christopher van Tienhoven, Chief Executive Officer
Patagonia Gold Plc
Tel: +54 11 5278 6950
Richard Tulloch / Ritchie Balmer
Strand Hanson Limited (Nominated Adviser and Broker)
Tel: +44 (0)20 7409 3494
This information is provided by RNS
The company news service from the London Stock Exchange
END
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