Amarillo Gold Corporation (TSX-V:AGC, OTCQB:AGCBF, FRA:72A) said that during the second quarter, it had made “great progress” on its shovel-ready Posse Gold Project on its Mara Rosa Property in Goiás State, Brazil, as it continued to explore its financing options.
Heading into a pivotal period for Posse, Amarillo’s strategy is to make the necessary expenditures to stay on schedule for Posse while minimizing its financial exposure until it obtains full construction financing. Amarillo is gearing up to start building its 100,000-ounces-per-year operation at Posse.
For its second quarter ended June 30, 2021, the Toronto-based company had C$40.5 million on hand, most of which is invested in short-term savings and investment accounts awaiting deployment for constructing Posse, exploration, and general corporate purposes.
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“Our goal is to find the right financing option for our shareholders,” said Amarillo CEO Mike Mutchler in a statement. “We want to make sure that our ultimate choice minimizes dilution and maximizes return for our shareholders.”
“We’ve continued to make great progress at Posse,” added Mutchler, “and launched a successful exploration program at Lavras do Sul, our second property, where our goal is to open a second development front.”
As Amarillo reported last quarter, the company had an exclusivity arrangement with an established financier that expired at the end of March. Under that arrangement, Amarillo completed significant technical due diligence, a process that raised no red flags.
However, the company said it “chose not to extend the exclusivity, so that it could explore whether there would be other financing options available that would be better for Amarillo.” Over the course of the arrangement, Amarillo has significantly de-risked the project, and as such, believes that it could get better terms than were originally contemplated. “Amarillo continues to explore all its options,” said the company.
In the meantime, the firm said it has achieved several milestones at Posse, which include the following:
- More than 90% of the land for the project area has been acquired and the firm is acquiring the final parcel;
- Nearly 45% of the overall project detailed engineering, including 91% of the early works detailed engineering, has been completed and the rest of the engineering will be based on major equipment acquisitions that will be purchased subject to project financing;
- Plan to purchase vendor drawings for ball mill to advance detailed engineering;
- Permits for three of its waste rock piles have been received;
- 92% of the engineering documentation for the crushing plant has been done; 3D model completed; and
- Equipment engineering for the grinding circuit has been completed.
The company said that since signing the power line agreement, 86% of the land needed to build the power line has been acquired. “Engineering is complete and overall project approval is pending from Amarillo’s partner, Enel Brasil, the state electric power utility,” said the company.
One of the terms of the License to Install for Posse is to develop local labour. “Over 2,000 people have registered at Amarillo’s training centre in the town of Mara Rosa since it opened in February, and over 500 people have been trained through 36 courses between January and July,” noted the company.
During the quarter, an 8,500-metre (m) drill program was launched targeting four areas close to the Posse Gold Deposit to identify potentially economic gold deposits that could add to Posse’s existing resources.
Posse is just one of two projects that Amarillo has in its portfolio. At its exploration stage Lavras do Sul Project in Rio Grande do Sul State, Amarillo consolidated its land position.
“A successful exploration program was begun, with the company drilling a significant gold-hosting structural zone at Matilde, one of 23 highly prospective gold targets on the property,” said the company.
Two holes located 50m apart along an east-west strike direction were drilled at Matilde, confirming the primary source of gold of an overlying gold-in-soil anomaly. “Wide intervals of gold mineralization were intersected from surface in both holes,” said the company.
Mutchler will give a corporate update during his presentation from the Precious Metals Summit Beaver Creek on September 11, 2021, at 10:15 am MDT (12:15 pm ET).
He will also present at the Gold Forum Americas on Monday, September 13 at 10 am. MDT (1 pm ET).
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive