Mine development at Orinoco Gold’s (ASX:OGX) Cascavel project in Brazil has continued to return bonanza grades, with underground panel sampling reading as high as 645 g/t gold, which equates to 20 ounces of gold per tonne.
This result was recorded within the first high-grade shoots in the mine plan.
Other samples from the sub-horizontal strike of the mineralised zone included 3.66 metres at 142.62 g/t gold and 4.56 metres at 49.65 g/t gold.
These finds were made only 15 metres from previously reported exploration decline results of 15 metres at 88 g/t gold.
The central portion of the mine now has underground sampling extending over a strike length of about 20 metres, with some sampling yielding significant visible gold still remaining to be assayed.
Cascavel’s initial mining area has now advanced through a previous exploration decline and is continuing north towards a service shaft, where visible gold continues to be encountered in face sampling of each advance.
This mine development is progressing according to plan as is the installation of the Cascavel gravity circuit, for which progress is expected to be updated in the coming days.
All of the material currently being mined prior to the start of stoping is expected to be ideal feedstock for commissioning the gravity circuit.
Cascavel is part of Orinoco’s Faina Goldfields project in a rich but under-explored part of Goias that has yielded numerous multi-million ounce deposits such as Anglo Gold Ashanti’s (ASX:AGG) world-class +5-million-ounce Serra Grande mine and Yamana Gold’s (TSE:YRI) +6-million-ounce Chapada mine.
Recent success
The latest gold finds at Cascavel follow quickly on the discovery of an exceptionally rich gold-bearing system at Cascavel mid-last month, with results including a 1.08-metre-long panel sample grading almost 15 ounces to the tonne (469 g/t gold).
Other results included 2.9 metres at 77.5 g/t gold, which came from underground sampling of the mine development.
Also, recent discussion with local authorities have resulted in a plan to optimise flowsheet metrics by relocating the gravity circuit to an on-site location less than 200 metres from the mine portal.
This has the potential to unlock significant operating cost savings for the project.
Civil works, including earthworks and foundations for the plant, are currently well underway, with the delivery of the first Brazilian-sourced crushing components completed during the September quarter.
The mine development is being financed through an innovative funding package, the major component of which is a US$8 million gold streaming arrangement with Chancery Asset Management.
Jurisdictional strengths
The Goias Velho region, which hosts the Faina Goldfields, was the first area to be found and mined by Portuguese settlers by 1680. It had an estimated production of 3 million ounces of gold during the colonial period, which made the city of Goias
The major cities close to the Orinoco mines are the state capital Goiania, located 170 kilometres with 2,000,000 habitants, and the national capital of Brasília, 350 kilometres away with 2,900,000 habitants.
All roads connecting these cities are good sealed roads with either single or dual lines.
Orinoco has planned to leverage off existing infrastructure in the region, with the purchase last year of Sertao from Troy Resources (ASX:TRY) expected to be a second, synergising development behind Cascavel.
Analysis
The latest results provide further evidence of the exceptionally high-grade nature of the mineralisation at Cascavel and extend the high-grade zone from which stoping will begin in January 2016.
Grades up to 645 g/t gold in an area already slated for near-term mining activity are an outstanding indicator of upside in operational metrics and resource expansion potential.
These panel samples are considered the best guide to the expected head grade of material mined from the stopes.
Importantly, the consistent encounters with visible gold at Cascavel are coinciding with excellent mine development progress, with six headings simultaneously advancing.
Orinoco’s share price momentum in recent months has outpaced the tide of stronger sentiment for gold, reflecting a growing market consensus that an imminent production start-up at Cascavel may add further value to the stock.
Shares in the company have tripled in value since the beginning of the calendar year to their last closing price of A$0.195.
Potential price catalysts for the company in the near term include the start of stoping at Cascavel, commissioning of the processing circuit, continued underground development works.
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