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Minera IRL’s Corihuarmi gold mine ‘performs beyond expectations’

Published: 14:28 14 Jul 2010 BST

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Emerging Latin America focused gold miner Minera IRL (LON:MIRL, BVL:MIRL, TSX:IRL) told investors that the Corihuarmi mine in Peru continues to perform ‘beyond expectations’. In the second quarter of 2010, the mine produced 8,098oz of gold, 10% ahead of the company’s budget.

During the three months to end-June the mine realised cash operating costs per ounce of just US$365 and achieved an average sales price of US$1,201 per ounce.

"Corihuarmi has, once again, performed beyond our expectations”, Minera IRL chairman Courtney Chamberlain said. “The net effect was that revenue from Corihuami for the quarter of US$9.9m exceeded the previous quarter by US$1.5m and the corresponding quarter of 2009 by US$3.2m, close to a 50% increase”. 

The company expects to expand production further, with an amended Environmental Impact Assessment (EIA) scheduled to be lodged with the relevant authorities in the next quarter, in order to increase ore production by a further 35% - to 2Mt (million tonnes) per annum in 2011. 

“This will allow economies of scale to be applied toward profitably treating lower grade ore which will be particularly attractive at high gold prices.  The extra capacity will also allow large scale production trials on broken scree material with an inferred resource ... containing 54,600oz of gold,” the chairman stated.

According to Chamberlain, the better-than-expected financial performance will provide more cash to apply to the company’s project development and exploration activities.

In a separate statement, Minera IRL said it has reached a significant milestone in its acquisition of the Ollachea gold project from Rio Tinto (LON:RIO, ASX:RIO), with a US$3.8m option payment. Ollachea is one of the company’s key development projects.

The company is now required to make total option and staged payments of US$6.25m, one of US$3.5m by the end of 2011. The final payment is due six months after completion of a Bankable Feasibility Study (BFS), and Rio Tinto will also retain a 1% net smelter royalty (NSR).

"We have now complied with the contained gold payment obligation to Rio Tinto as a significant component in perfecting our 100% acquisition of Ollachea ... [the] payment underscores the confidence we have in progressing the project toward an operating mine," Chamberlain stated.

Minera IRL initially acquired its interest in Ollachea in 2006, via a competitive tender. Since then, the company began exploring the property in early 2008. Minera IRL has hade strong progress at the site with the current resources standing at 1.1Moz (million ounces) in the inferred category – based on 8.9Mt (million tonnes) grading 4.5g/t (grams per tonne).

The company is currently working towards the completion of the Ollachea pre-feasibility study, being conducted by Coffey Mining. Earlier this month, the company reported that the study is making excellent progress with the data gathering phase.

The company has finished 32 of 39 infill diamond drill holes, bringing the total to 80 for 28,846 meters, with their results being consistent with the geological understanding of the mineralized lenses.

Minera IRL also extended its footprint in the surrounding area, as announced this week, with an option over the Killincho property – which is hosted on the same gold-bearing Sandia geological formation.

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