The past year has been one of enormous progress for gold explorer Condor Resources (LON:CNR) – a period in which it has achieved a number of crucial landmarks.
From a standing start the group now has a JORC resource of just over 1 million ounces gold at a high grade of 6.0 grams per tonne on the La India project in Nicaragua.
Fully funded for a 20,000 metre drill campaign it is keeping four rigs turning over and has a staff of 100 on the ground making sure the successive upgrades to that JORC number come through with unerring regularity.
Behind the scenes, chief executive Mark Child has been busy, increasing Condor’s 80 per cent holding in La India to full ownership, while taking control of Espinito Mendoza in a US$1.6 million deal.
Anyone familiar with the group’s activities will know that concession was the missing piece in the La India jigsaw.
In fact Espinito will play a crucial role in taking that resource figure above 1.5 million ounces by the year end.
Child is already on record as saying he is aiming by the middle of next year to have doubled the current resource base.
This, he says, gets Condor on the radar screens of the larger producing players in the gold sector. “Getting to two million ounces is strategically important for us. This is when hopefully we will register with the top 30 miners.”
Although the group is considering compiling a bankable feasibility study to underline the economics of the La India, the plan is to sell rather than mine the deposit, which boasts historic production of around 500,000 ounces at a very high grade 13.2 grams per tonne on the site.
The intermediate aim of compiling a 1.5 million ounces resource to JORC Code before the year-end will be achieved in three phases.
It is expected that Espinito will give Condor another 200,000 ounces. We should hear something on its contribution in around four weeks.
After that there is the result of a 10,000-metre drilling campaign, which will be digested by independent consultants SRK, which it is hoped will spit out a further 300,000 ounces of resource.
Just for good measure Rio Luna, one of two other projects in Nicaragua, will have a resource assigned.
Historic drilling and trenching work has been digitised and is currently being assessed. It is hoped this asset will contain 80,000 ounces.
So this ought to push the group well and truly over the finish line for the first part of the resource upgrade campaign.
The drill rigs keep on spinning well into 2012 as the group completes the remainder of its 20,000-metre programme.
By that time, in early summer, the 2 million ounce landmark ought to have been hit. At this point Child and his team need to sit down and decide the next step.
One route might be to compile a bankable feasibility study on the 2 million ounces, thereby adding some detailed economics to the project.
The alternative, however, could see it restart the drilling to prove up a further one to two million ounces at La India.
Whether it does this or not may in turn depend on the results of a deep drilling programme due to get underway later this year.
This is perhaps the most interesting and exciting phase of Condor’s drill programme. To date the group has drilled to an average depth of just 150 metres.
Two of the rigs it has onsite have the capacity to go down to 500 metres. And they will identify the point at which two of the main veins, which run parallel to each other for a length of over 1,000 metres at surface, converge at a depth of around 200 metres beneath surface.
The results of this crucial phase of drilling are expected by the end of the first quarter.
“There is an area we have identified where the veins converge at depth in the middle of the district. We think we are onto something as this could be the feeder zone for the gold mineralisation in the district,” Child says.
“On the 3D model they converge at 200 metre depth. And that is the exciting thing for the geologists.
“When gold veins converge you tend to get a blow-out of grade or width or both.
“We will put a few thousand metres of the remaining drilling to test what happens when those veins converge at depth.”
Before he embarks on a more detailed analysis of the project, the Condor chief is keen to sketch in some financial details with a conceptual study of La India, which is expected to be an open-pit and underground operation.
“We are getting to a point where in eight weeks we will have 1.5 million resource ounces. So we have to run some numbers around it,” he adds.
Those who have followed Condor will know it also has a gold-silver project in El Salvador of just over 1 million ounces.
However its progress has been hindered by a mining moratorium introduced as the government of the Central American country assessed how best to implement stronger environmental laws.
A report is being compiled by the Tau Group of Spain, and publication is imminent.
While others have reacted to the stop on mining by suing the government, Condor has taken an altogether less confrontational tack.
It has co-operated with the Tau report and has placed 10 per cent of the El Salvador subsidiary into a UK registered charitable foundation.
“The beneficiaries will be the poor and most needy,” Child says.
“We think this is the best way to co-operate with the authorities, not suing them.”
One of the company’s less obvious achievements was to bring aboard Macquarie Bank as a cornerstone investor.
The bank bought £3 million of new equity at 9 pence, which gave it a 6 per cent stake in Condor.
“Macquarie has an interesting role,” says Child.
“The main gain is they want to lend on the project. So if a mill is put up for US$100 or US$200 million they want to lend 60-70 per cent of that.
“To give them a great advantage in a few advanced exploration stage companies they build a relationship with the company by acquiring equity. Condor has ticked the boxes and Macquarie has put the money in.”