Orinoco Gold’s (ASX:OGX) flagship Faina Goldfields Project is located in the central Brazilian state of Goiás, 120 kilometres southwest of AngloGold’s (ASX:AGG) world-class Serra Grande mine and Yamana Gold’s (NYSE:AUY) Pilar mine.
The project consists of a large tenement package of 200 square kilometres that encompasses numerous exploration targets and the company’s Cascavel, Sertão and Tinteiro Projects.
Orinoco Gold has begun building its first gold mine at Cascavel, having successfully completed a US$8 million finance facility, which underpins its development.
Proactive Investors is joined exclusively by Orinoco Gold’s managing director, Mark Papendieck.
PROACTIVE INVESTORS: Welcome Mark.
Firstly, could you please outline the company’s key projects and current focus in Brazil?
Mark Papendieck: Our key project in Brazil is the Faina Goldfields Project and within that we are currently developing our first gold mine – the high-grade Cascavel Gold Project.
Mine development at Cascavel is currently underway and we plan to have the mill commissioned towards the end of this year.
How will mine development be funded, along with any exploration?
Mark Papendieck: Our key activity right now is the move from exploration into development of the mine.
We are fully funded to see us through into production, with a US$8 million finance facility in place that we have already commenced drawing down on.
We also recently completed a rights issue to shareholders, and in total have access to $14 million.
The capital expenditure for building the mine and commissioning the gravity circuit is in the order of US$6.5 million, so we are well funded to complete that.
We are stockpiling development ore right now, and we will commence stoping high-grade ore next quarter, which is scheduled to start being processed through the mill in December this year.
Can you provide some recent highlights?
Mark Papendieck: The Cascavel Gold Project is a very high-grade gold project.
Our latest bulk sampling from underground is coming up with grades in the order of 15 metres at 88 grams per tonne of gold.
With most of the gold at Cascavel being ‘free gold’ our metallurgical testing tells us that we should get excellent gravity recoveries which will lead to a lower operating cost for our mill.
Is Orinoco Gold able to leverage off existing infrastructure at the Faina Goldfields Project?
Mark Papendieck: Yes, in a couple of different ways. Early last year, we purchased Troy Resources’ (ASX:TRY) first Brazilian mine, Sertão and we are targeting that to potentially be our second mine developed behind Cascavel.
So the ore will be mined at Cascavel and processed at a plant that we are building at the moment at Sertão.
So, we will be able to leverage off the existing infrastructure there, including roads and importantly the skilled labour force that Troy earlier used to mine Sertão.
There is plenty of infrastructure already in place including roads and power - and it is a big gold producing state in the centre of Brazil, over a thousand kilometres south of the Amazon.
Can you outline any key upcoming catalysts for investors?
Mark Papendieck: There are two key business streams for us, firstly, the commissioning and development of the gold mine at Cascavel and bringing that online.
Secondly: exploration. Growing the mine at Cascavel and bringing in other sources of ore, like from Sertão is critical to us. There will be some near term drill campaigns that we will be detailing to the market shortly.
On the development front, the key events are the commencement of the incline shaft at Cascavel, which has already taken place.
Once we are down to the first sub-level, stoping will commence for high-grade ore. It will be two or three months away from now.
We expect some excellent news flow in regard to grades as we develop the stopes, further reinforcing what we know from existing underground sampling and drilling - there are some very high-grade portions within Cascavel.
I think there will be some excellent results on the way through to mine commissioning in what is certainly a very quick mine development and commissioning process.
Finally, why are you excited about the company’s prospects and why should investors be?
Mark Papendieck: We are literally developing a high-grade gold mine over only a very small percentage of the known strike at Cascavel.
Drilling has shown that Cascavel has a strike at over a kilometre and our deepest line of holes, which is 700 metres down-dip has intersected visible gold and we are only mining a strike length of 110 meters to begin with.
While it will start as a small gold mine, Cascavel will not stay small. We intend to grow it very rapidly once in production.
Sertão is similar and we have a number of other sites that we would like to target for potential production once we have a central mill developed.
Once built, installed and commissioned, we can simply add ore from other sources at a very low additional cost.
So we have the opportunity to grow a very low CAPEX production centre.
PROACTIVE INVESTORS: Thank-you Mark.
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