Ollachea gold project moving forward after successful scoping study

Following a successful scoping study, Mnera IRL is pushing ahead with an infill drilling program at its Ollachea gold project in Peru

LONDON - 

South American focused gold producer and mining developer Mineral IRL (AIM: MIRL) has confirmed that it will be pushing forward with infill drilling at the Ollachea Gold Project in southern Peru after it released a scoping study considering the viability of the project as an underground mining operation.

The scoping study was based on a N143-101 compliant inferred resource containing 1.3 million ounces of gold (8.9 million tonnes @ 4.5 grams per tonne gold (g/t)) and mining inventory of 8.2 million tonnes grading 4 g/t (1.1 million ounces). The resource estimate used a cut-off grade of 2.5g/t gold.

The study considered an underground mine, accessed via a 1.3 kilometre tunnel treating 1 million tonnes per annum to produce approximately 117,000 ounces per annum over a 9 year mine life. Capital costs were estimated to be in the region of US$157 million, including a 20% contingency, with cash operating costs below US$400/ounce. Based on a gold price of US$850/ounce, the mine generated a pre-tax internal rate of return (IRR) of 22.4%, 17.4% post-tax.

Clearly the scoping study generated strong enough preliminary figures to justify further development of the project. It is also worth noting that the current study is only based on 26,000 meters of drilling, of which 15,400 meters was focussed on the Minapampa Zone, which is still open along strike and down dip, suggesting plenty of scope for Minera IRL to expand the size of the resource.

"Another particularly encouraging aspect is the upside potential. The gold mineralization has not been closed off either along strike nor down dip," stated Executive Chairman Courtney Chamberlain. We continue to obtain good gold intersections beyond the confines of the Minapampa zone. For example, drill hole DDH09-67, approximately 160 meters beyond the eastern boundary of the currently estimated resource, intersected 45 meters grading 2.81g/t including 6 meters of 10.1g/t gold. Hole DDH09-64 returned 16 meters grading 2.92g/t including 5 meters of 5.83 g/t gold."

Metallurgical test work carried out on 5 samples has estimated 91% gold recovery can be achieved by conventional gravity and leaching methods.

"This gives us every confidence to progress immediately to the infill drilling required to raise the resource confidence to the Measured and Indicated categories and, simultaneously, commence the pre-feasibility study," added Chamberlain. "All indications are that Ollachea will make a very successful mine. The geometry of the gold zones is particularly well suited to easy access and mechanized underground mining. This has the added benefit of having minimal environmental impact."

Chamberlain added that the local community would hold a 5% interest in any future operation.

Last week Mineral IRL reported third quarter results, which showed revenues of US$7.8 million on gold production of 7,850 ounces at a cash cost of US$361 per ounce. At the end of September, the company had $18 million in cash on its balance sheet.

Published courtesy of Proactive vestors - www.proactiveinvestors.co.uk

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