Patagonia Gold (LON:PGD) said earthworks for the first stage of the Lomada de Leiva gold-heap leach project in Argentina began last week. Earthworks, pad construction, mining and loading are scheduled for completion in Q4 2010.
Tenders for the associated infrastructure are being finalised for award in the fourth week of September with completion planned for early Q1, 2011. Irrigation of the heap leach pad will then commence with the production of the first gold soon thereafter.
The first stage of the Lomada project consists of the construction of a 50,000 tonne trial heap leach, which based on 70 percent recovery, is estimated to yield approximately 2,200 ounces of gold for the first 6 metre loading.
Subject to successful leaching and additional permitting, further loading and production from the first stage heap leach will continue until the main 5 million tonne heap leach project is fully operational, scheduled for Q4 2011.
The Lomada de Leiva gold heap leach project is located on the La Paloma property block approximately 40km to the south of the town of Perito Moreno and currently contains a NI43-101 compliant resource of 237,000 ounces (ozs) of gold.
Patagonia in July this year acquired the freehold land rights over the Estancia El Rincon in the Santa Cruz province of Argentina - a 6,700 hectare area which hosts the La Paloma concession - for US$804,000. The company initially acquired the Lomada project in 2007, with the purchase of the Paloma concessions from Barrick Gold (NYSE, TSX: ABX).
The main heap leach project will require low pre-production capital of US$8.5 million and is designed to produce 21,000 oz of gold per year for a mine life of 7 years, at a cash cost of US$299/oz.
Patagonia envisages project pretax cash flow of US$63.6 million, based on a cash price of US$850/oz. gold
There is significant potential to increase the mine life at Lomada de Leiva with further drilling on the remaining inferred resource not included in the main heap leach project, together with additional extension and exploration drilling on Lomada de Leiva and the adjacent Breccia Sofia prospect.
Managing director Bill Humphries commented: “It is very pleasing to announce the commencement of construction for Patagonia Gold's first gold mine, Lomada de Leiva, particularly with the knowledge that we have further exciting projects following in the development pipeline with the advanced Cap-Oeste, Cose and Manchuria projects.