Orosur Mining (TSX-V:OMI, LON:OMI) said the feasibility study (FS) for its Arenal Deeps gold-silver project in Uruguay has indicated a six year mine life with an IRR (internal rate of return) of 32.3%.
The price assumption for the FS was US$1,000/oz, which is 20% less than the current spot price of US$1,250/oz.
Total cash costs have been estimated at US$545/oz, while total life of mine capital and operating costs were put at US$24.7 million and US$73.4 million respectively. Net present value (NPV) with a 7% discount amounted to US$16.4 million.
Payable gold has been estimated at 135,000 oz.
“This feasibility study for Arenal Deeps is an important step for the company in our objective to extend the San Gregorio mine life in Uruguay while maintaining production levels at approximately 50-60,000 ounces of gold per annum.
“The initial investment in capital and skills will also allow additional underground reserves to be targeted at San Gregorio to further extend mine life,” said chief executive David Fowler.
Orosur is progressing tenders for contract mining and equipment purchases with board approval to be considered in the coming months.
Funding for the project will be generated from debt and operating cash flow, which the company said was enhanced by the recent surge in gold prices.
The mineral resource at Arenal Deeps was modeled and estimated by Mine Development Associates (MDA) at 2.05 Mt (million tonnes) at 3.68 g/t (grammes per tonne) gold as a base case.
Arenal Deeps is the down plunge continuation of the Arenal deposit that waste mined as an open pit between October 2004 and April 2009 and produced 388,000 ounces of gold at an average grade of 2.16 g/t gold.
AMEC E&C Services, which completed the FS, estimated the total measured and indicated resource at 4 Mt grading 2.49 g/t gold for a total 321,000 oz contained at a 1 g/t cut off. The inferred resource stands at 99 kt (kilotonnes) grading 2.84 g/t gold for 9,000 oz contained.
Orosur now expects to have a NI43-101 compliant mineral resource/reserve for silver contained within the gold estimates completed in October this year.
Infill drilling planned in the FS is also expected to identify additional mineralization that could support conversion to mineral resources, and eventually to mineral reserves.
A request for environmental approval for the Arenal Deeps project was submitted in late April and Orosur is currently in the process of obtaining the environmental approvals for the project from DINAMA, the relevant authority in Uruguay.
At the start of the month, Orosur reported a 1.04 million ounce (Moz) maiden NI43-101 gold resource for the Pantanillo Norte deposit in Chile.
In the Measured and Indicated category, Pantanillo Norte has 1,049,071 ounces, with 47,093,000 tonnes grading 0.69 grams per tonne (g/t). There is also 5,166 ounces in the Inferred category, with 304,000 tonnes at 0.53g/t gold.
Back in August, Orosur entered into a definitive option and joint venture agreement with Gladiator Resources Ltd (ASX:GLA), providing GLA with the right to earn up to an 80 percent interest in Orosur’s iron ore, manganese ore and base metals prospects in the Isla Cristalina Belt in Uruguay.