It switched output to Cap Oeste this year from the nearby Lomada mine, never an easy thing to accomplish but the transition had gone smoothly said Carlos Miguens, Patagonia’s chairman.
Full leaching capacity was realised within the first three weeks of operation, with metal recovery in line with forecasts but importantly from a cost perspective cyanide consumption was half the original estimate.
Cap-Oeste is expected to produce 82,000 oz gold equivalent over the next 24 months excluding satellite deposits such as Monte Leon and any underground development.
Miguens added the focus would now be on developing the resource base.
Caps off to Cap-Oeste
Cap-Oeste lies on the El Tranquilo property, and on its own, holds 1.3 mln ounces of gold equivalent in the higher confidence indicated category, with a further 385,000 ounces inferred.
A nearby deposit Cap-Oeste South East (COSE), adds 83,000 further gold equivalent ounces of indicated, with a further 16,000 ounces inferred.
The pit design contains a total measured and indicated resource of 1.56 mln tonnes (Mt) at 2.21 g/t gold and 80 g/t silver for a gold equivalent grade of 3.29 g/t
Cap Oeste has been a stop-start project but in April, when the group revealed it had raised US$10mln via placing, the total cost of realising it was put at US$13.5mln, of which US$2.1mln had already been spent.
Carlos Miguens put up half the cash via a subscription, while the rest came from an open offer.
Results underpin improving outlook
The first gold from Cap-Oeste is the latest in a run of upbeat announcements from the Argentina–based miner.
The company reported a US$10mln turnaround from losses into a profit of US$3.6mln in the six months to June, as production jumped by 70% to 16,900 ounces while cash costs almost halved to US$591 per oz.
The political and economic situation is Argentina is also improving and having a very positive effect on the business said Christopher van Tienhoven, chief executive.
What's it worth?
CantorFitzgerald 's sum of the parts (SoP) valuation of the company with varying pricing methods generate valuations of 3p and 6p/share respectively against a current share price for the company of around 3.1p, up 18% today on the dore news. At that price, the miner is worth around £48mln.
If Patagonia can successfully establish production at Cap-Oeste and extend the life of the mine, the broker reckons valuations of around 6p are achievable in time.
As well as Cap-Oeste (and COSE almost next door) there is the La Manchuria project around 60km north northeast of Gobernador Gregores in Argentina's Santa Cruz Province.
That hosts the Manchuria Main Zone gold and silver project where plans are afoot to maximise value through some form of joint venture deal.
Exploration has also commenced on the company’s ground in Uruguay.