Patagonia Gold (AIM: PGD) has raised £13 million in new capital, with the completion of a placing for 80m shares and a subscription of 1.25m shares, with all new shares being issued at 16p each. The net proceeds will be used to advance exploration and development work and to begin a trial heap leach operation at the Lomada de Leiva gold project in the Santa Cruz province of Argentina.
The company’s broker, Matrix Corporate Capital, placed the shares with new and existing shareholders. The new shares represent 12.04% of the enlarged issued share capital, and it is expected that the new share will begin trading on Monday 10 May 2010.
Last month, Patagonia was granted approval for its environmental impact study from the State Secretariat of Mining of the Province of Santa Cruz. The company concurrently received the necessary permits for the proposed trial heap leach operation at the Lomada de Leiva gold project.
The proposed heap leach operation at Lomada is expected to produce over 21,000oz of gold per year at a low cash cost of US$300 per ounce for the minimum expected mine life of 7 years. Previously, Patagonia has said that the project has “considerable growth potential” with the conversion of the inferred resources by infill drilling and the development of additional resources.
The Lomada de Leiva project is contained within the La Paloma Group of concessions, which total 44 square kilometres and is wholly-owned by Patagonia Gold. The concessions were acquired in February 2007 from subsidiaries of Barrick Gold Corporation (NYSE, TSX: ABX) under an agreement which includes a back-in option clause on delineation of 2 Moz (million ounces) gold equivalent.
Previous exploration at Lomada de Levia returned grades of 5.33 g/t (grams per tonne) gold over 11 metres, 5.45 g/t over 17 metres, 9.08 g/t gold over 17.6 metres, 3.13 g/t gold over 10 metres, 2.59 g/t gold over 12.45 metres and 5.21 g/t gold over 14.7 metres.
Also, a drilling campaign carried-out by Patagonia reported intercepts including 18 metres at 6.87 g/t gold, 10 metres at 12.68 g/t gold and 36 metres at 4.78 g/t gold.
The company has a number of other key projects in the Santa Cruz province, notably La Manchuria and the Cap-Oeste, and a prospective area consisting of over 200 properties covering 7,000 square kilometres.
The Cap-Oeste deposit, which contains a 43-101 compliant indicated resource of 149,842 ounces (oz) gold and approximately 3.65 million oz silver with average grades of 1.44g/t Au and 35.15g/t Ag, plus inferred resources of 154,257oz Au and 3.28 million oz Ag with average grades of 1.42g/t Au and 30.16g/t Au.
Patagonia has been exploring the COSE (Cap-Oeste South East) prospect, which is one of two targets identified by the company in 2009 in close proximity to the Cap-Oeste deposit. In March, The company reported that drilling at COSE continued to intercept bonanza grades of gold and silver. The highlight of the results, was a 13.93m intersection at 159.23 g/t Au and 627 g/t Ag from 214 meters, including 1.6 meters grading an eye-watering 1,284.15 g/t Au and 3,977 g/t Ag. COSE sits approximately 2 kilometers to the south-east and along strike from Cap-Oeste.
La Manchuria consists of five ‘expedientes’ mining concessions, which cover 5,575 hectares, located approximately 50km to the south-east of COSE. Last month, Patagonia told investors that the results from a recently completed drilling programme, on the Main Zone of La Manchuria, confirmed the continuity of high grade gold and silver mineralisation, producing grades of up to 145 g/t (grams per tonne) of gold.