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PanTerra Gold (ASX: PGI), formally known as EnviroGold, is a near term gold producer at its Las Lagunas project in the Dominican Republic with construction scheduled for completion in December 2011. The project has an expected life of seven years at an annual production rate of 65,000 ounces of gold and 600,000 ounces of silver.
PanTerra Gold is also active in Ecuador with the advanced Azuay Gold Mining project and the San Gerardo Gold Mining prospect. At the Azuay project, construction is targeted to commence in mid 2012.
EnviroGold revised Scoping Study boosts Ecuador gold project economics
EnviroGold (ASX: EVG) has boosted the economics for its 65%-owned Azuay gold project in Ecuador after revising the Scoping Study to include the proposed expansion of production from the Papercorp and Pinglio underground mines in two stages.
This is expected to substantially reduce the equity requirement and risk profile of the US$92 million project, which is targeting approximately 100,000 oz gold production per year by mid 2014.
EnviroGold could book after tax profits of about US$250 million over a 14 year mine life at US$1000 per ounce (oz) gold, increasing to US$365 million at US$1200 per oz gold.
The primary source of funding will be generated by the company’s Las Lagunas project which is expected to commence gold and silver production in January 2012.
The revised development concept will involve a progressive increase in the mining rate from mid 2012 to achieve ore production of 25,000t/month within six months. The ore will be trucked approximately 20km to a process plant and tailings dam site.
The first stage of development will involve the construction of a gravity circuit to extract up to 50% of the contained gold, which is free milling. Gold production is expected to ramp up to approximately 50,000 oz per year from commissioning around June 2013.
Free cash flow from this production will be applied to the second stage of the development. This will require the addition of an Albion oxidation plant combined with a standard carbon-in-leach circuit to extract the balance of gold, which is contained primarily in refractory ore.
The second stage is expected to be commissioned in late 2014 and result in total gold production increasing to around 100,000 oz per year.
A drilling program has commenced within the mines and a development decision could be made in mid 2012 depending on results confirming the advice of geological consultants that near mine expansion should yield a 4mt mining target grading from 10g/t Au to 12g/t gold.
Features of the Scoping Study for the Azuay project include a current NPV for the project (10% discount) US$116.3 million based on US$1000/oz gold price, and US$185.9 million based on US$1200/oz gold price.
If the project proceeds as expected the company will provide US$5.2 milion of equity for the Azuay project over the next 15 months (in addition to US$1.3 million already contributed) and a further US$10.1 million of shareholder loans by December 2013.
The Azuay project is at the centre of a highly mineralised gold belt with the Papercorp and Pinglio mines surrounded by reported NI43-101 (Canadian JORC equivalent) compliant resources of over 15 million oz gold.
The Azuay process plant and tailings dams will be designed to permit expansion to accommodate increased tonnage of ore sourced from the adjoining San Gerardo property which is under a three year purchase option to EnviroGold (100%).
The 2200 hectare (ha) concession hosts high grade vein sets in five underground workings with similar ore to that in the Papercorp and Pinglio mines.
The company will commence an exploration program on the San Gerardo lease later this year and focus on these prospects as well as the open-pit potential of five identified areas of mineralised hydrothermal breccias, and a 80ha area of copper-gold-molybdenum mineralisation.
