Orinoco Gold (ASX:OGX) has established strong potential to delineate additional high-grade ore shoots at its Sertão gold project in Brazil, with a newly completed drilling program identifying the down-plunge continuity of a previously mined high-grade area.
Whilst assays for near-surface mineralisation remain pending, the campaign across 915 metres of strike has demonstrated consistent hydrothermal alteration with results for the drilling in fresh rock mineralisation.
Some of the best results have included 0.5 metres at 7.33g/t gold from 141.5 metres, 1.82 metres at 13.55g/t gold from 130 metres and 0.65 metres at 13.05 g/t gold from 126.2 metres.
Higher grades were also delivered in 0.46 metres at 21.40g/t gold from 131 metres and 0.5 metres at 46.8g/t gold from 150.2 metres.
One intercept 1.6 kilometres down-plunge from the abandoned Sertão mine returned 2 metres at 18.7g/t gold from 541 metres vertical depth.
The historic pit produced 256,000 ounces at 25g/t gold.
Historic drilling near the site of the previous operation's process plant has included 2.65 metres at 22.43 g/t gold from 6 metres, 7 metres at 4.85 g/t gold from 8 metres and 6 metres at 6.64 g/t gold from 12 metres.
Regional progress
Potential for extended down-plunge mineralisation at Sertão is further supported by analogous activity at Orinoco's Cascavel operation only 28 kilometres away along the same shear zone structures.
Cascavel has demonstrated significant down-plunge extent with visible gold in the deepest hole drilled to date delivering 0.5 metres at 2.5g/t gold at about 720 metres down dip from the current mining area.
Stoping of the first high-grade material at Cascavel will begin this month for the high-grade, high-margin project.
Construction of the project’s crushing circuit is now 85% complete while the factory-commissioned gravity circuit has arrived in Brazil and will soon clear customs.
Commissioning of the Cascavel plant with lower grade development ore remains on track for this current quarter (Q1 2016).
A plan to raise up to $6 million is expected to boost planned production by more than 50% in less than a year.
This will lift production at Cascavel from a planned start-up rate of 40,000 tonnes per annum in the March quarter of 2016 to more than 60,000 tonnes per annum in the December quarter of 2016.
Analysis
The latest drilling results at Sertão demonstrate the opportunity to define the continuity of the existing mineralised zone over a significant area.
The now identified hydrothermal alteration assemblage associated with the mineralisation will facilitate the use of geophysics in future exploration, which itself represents strong near-term newsflow and potential price catalysts for Orinoco.
Sertão also benefits from the fact that its potential to host significant high-grade gold ounces is being developed on an existing mining lease.
The follow-up program will be planned following the receipt of the assays from the latest drilling as well as new detailed geophysical studies and further drilling aimed at making Sertão part of Orinoco’s regional production profile.
Regionally, the shallow plunging gold systems suggested at Sertão have demonstrated a very significant down-plunge extent on other operational sites, including Anglo Gold Ashanti’s (ASX:AGG) Serra Grande mine and Yamana Gold’s (TSE:YRI) Pilar mine.
Orinoco shares were last trading at A$0.16.5, or more than 120% higher year on year.
Proactive expects this price (for a $36 million market cap) is modest and should resume its upward climb as plant commissioning is successfully completed this quarter.
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