Patagonia Gold tanks after study shows it needs to find more oxide ore for its Cap-Oeste site

Shares in mining group Patagonia Gold tanked on Thursday after the company said a new study revealed it will need to find more oxide ore to ensure its Cap-Oeste project in Argentina is viable at the current gold price.The London-listed miner said that a recent pre-feasibility survey had shown that the oxide ore at the site could have easily been extracted via heap leaching, a procedure which consists of placing precious metals in a heap and sprinkle a leaching solvent over it.However, the study also found there was not enough oxide ore to warrant further development, meaning Patagonia will now will now step up work on other sites of the El Tranquilo licence, which contains Cap-Oeste and also the COSE and Monte Leon prospects.The group's original plan had been to develop Cap-Oeste in two separate stages, by initially focusing on the oxide resources before moving onto the deposit's more abundant but more complex sulphide ore.Patagonia said it will now carry out tests at COSE to evaluate the possibility of extracting the gold and silver through agglomeration of a gravity tails product for inclusion with the Cap-Oeste oxide ore."The company continues to see a promising long term future for the Cap-Oeste project once conditions in mining markets have normalised," said group's chief executive Bill Humphries.Patagonia shares were down 16.67% to 2.50p at 10:03 on Thursday.