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Minera closer to Torrecillas gold processing, in toll treatment talks

Published: 17:15 20 May 2014 AEST

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Minera Gold (ASX: MIZ) has started negotiations for toll processing of third party high grade gold ore at its San Santiago Processing Plant in Peru as it continues the transition to owner operator ore processing.

Long lead items including the ball mill, primary crusher and cone crusher, have now been delivered to its engineer’s workshop in Lima.

Civil works at the San Santiago Processing Plant, which will primarily process ore from its Torrecillas Gold Project, are also ongoing.

Minera has also completed full mechanical and metallurgical engineering of the CIP circuit upgrade.

The crushing circuit equipment, including all supporting screens and conveyor belts will be transported to site in early June for installation with the ball mill to follow by the middle of June 2014.

Negotiations have commenced with parties for toll processing of third party high grade ore.

Third Party Toll Treatment


Minera is also carrying out discussions with a number of formalised co-operatives who mine high grade gold from properties within easy trucking distances of San Santiago to process their ore under a toll treatment arrangement.

It continues to assess the ore being offered to ensure its compliance with Peruvian laws that govern the sale of ore by miners and also the metallurgical composition of the ore being offered.

The company noted that while its priority is to treat its own ore from the Torrecillas Gold Project, toll treatment of third party ore will be considered to fill any excess capacity in the circuit, particularly where grades exceed 20 grams per tonne gold.

San Santiago Processing Plant

Minera has negotiated and signed a turnkey contract with RLD Fabricaciones y Minera S.A.C (RLD) in Lima, Peru for all civil and mechanical engineering works required at the San Santiago processing plant.

The works that RLD are undertaking under the negotiated turnkey contract includes:

- Supply and installation of a standalone crushing and grinding circuit for the gold circuit;
- Installation of a crushed material conveyor belt from the ROM pad to within the gold circuit security perimeter;
- Refurbishment of the existing CIP tanks and equipment in accordance with the approved flow sheet;
- Install of new reagent and carbon activation tanks;
- Upgrade of tailings removal infrastructure.

Construction of the remaining components, being conveyor belts, mixing tanks and vibrating screens is ongoing in the workshops of RLD in addition to sourcing of all required short lead time items such as piping, pumps and hydrocyclones.

The majority of these items are expected to leave Lima for Otapara in early June with the ball mill to be the final piece delivered and installed in the second last week of June immediately prior to commissioning.

Torrecillas Gold Project


Minera had recently raised US$7 million for recapitalisation and funding capital required to complete the planned expansion of the Torrecillas Gold Project in Southern Peru.

This consisted of US$5 million in payments from precious metals streaming company SilverStream under a gold purchase agreement and firm commitments from new and existing shareholders for A$2.1 million in convertible loan proceeds.

Besides the move to an owner operating processing model, the company will be able to develop high grades veins at the project including Rebecca, Ady and Tessie.

Torrecillas had a defined maiden JORC resource delivered Jan 2012 of 102,100 ounces of gold at an average grade of 16.1 grams per tonne gold.

Analysis

Today's news is promising on a number of fronts.

The transition towards owner operator ore processing at Minera Gold’s Torrecillas Gold Project continues apace with delivery of long lead items.

This will increase production to 19,500 ounces by November 2014 before ramping up to 28,000 ounces in 2015.

Cash costs are also expected to fall to $690 an ounce from $1,130, providing significant margin and earnings generation for Minera given forecast increased recoveries and high grades processed.

With Minera in discussions with third party groups nearby to toll treat their high grade ore using the plant would ensure the mill is operating to capacity.

Any agreement could be expected to be share price accretive to Minera.  As is the ramp-up in production in November.

 

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