3 Nov 2017 07:00
3 November 2017
Patagonia Gold Plc
("Patagonia Gold" or the "Company")
Production Guidance and Resource Update
Patagonia Gold Plc, the mining company with gold and silver projects in the southern Patagonia region of Argentina, Chile and Uruguay, announces an update of the Cap-Oeste resource model and forecast production update for the Cap-Oeste heap leach operation.
Summary
· Total production for 2017 is estimated to be 30,950 oz AuEq (2016: 25,800 oz AuEq, 2015: 21,521 oz AuEq)
─ Production at Cap-Oeste for the year expected to be 24,850 oz AuEq, significantly lower than previous guidance due to delays in getting the agglomeration circuit installed
─ Recovery issues at Cap-Oeste now resolved and overall recovery ramping up to design
─ Production at Lomada is expected to reach 6,100 oz Au for the year, significantly higher than forecast for the year
· Update resource model of Cap-Oeste shows contained ounces of COSE style (high grade) cyanide leachable mineralisation double to 295,000 oz AuEq
Production guidance
After a series of significant setbacks, the Cap-Oeste heap leach pad is now producing from a fully commissioned agglomeration plant, with the recovery issues having been resolved. The first pass leaching of fully agglomerated product over a period of 14 days, resulted in a recovery of 62% which is in line with testwork results and expectations for this length of leaching and the Company remains confident that gold recovery of 80% will be achieved on completion of the full leaching cycle. Agglomeration of the ore continues on a daily basis with throughput now exceeding 3,000 tonnes per day from a 12 hour shift, with 85,000 tonnes of agglomerated ore having now been loaded onto the pads as at the end of October 2017.
As a result of the previously announced recovery issues experienced at Cap-Oeste, production for 2017 has been materially impacted and the Company now expects production from the Cap-Oeste heap leach operations to be 24,850 oz AuEq for 2017 full year, with 10,100 oz AuEq for the final quarter of 2017. The Company expects to provide production guidance for 2018 during Q1 2018.
Lomada continues to perform well with production exceeding expectations with production for 2017 expected to be 6,100 oz Au. Leaching at Lomada will continue for as long as it remains commercially viable.
Cap-Oeste resource update
Current pit operations have now advanced to a level where high grade COSE style hypogene mineralisation has been exposed, enabling the Company to confirm the shoot's dimensions and style of mineralisation and grade below the current pit. A subsequent reinterpretation of the deeper drilling and mineralisation intersected below the current pit, has led to a material increase in the tonnage and contained Au and Ag of this non refractory style of mineralisation (which falls within the COSE style mineralisation).
An updated JORC compliant resource model has been completed by CUBE Consulting to report on the ore below the current pit and shows a material increase in the COSE type mineralisation, which can be treated via cyanide leaching, in the Cap-Oeste resource (Measured and Indicated) which is now approximately 295,000 oz AuEq at an average grade of approximately 19.40 g/t AuEq.
The current pit, which is expected to be completed in March 2018, as at the end of August 2017, still contains 578,347t @ 3.32 g/t Au and 131 g/t Ag for 61,875 oz Au and 2.44 Moz Ag for a total AuEq contained oz of 96,994 oz and has not been included in the updated JORC Code Compliant resource.
The tables below set out the JORC Code Compliant resource below the current pit.
Table 1: JORC Code Compliant Gross Resource for Cap-Oeste below the current pit - October 2017
Gross Resources for Cap-Oeste | |||||||
Geo Ox | Tonnes | Grade (g/t) | Metal (oz) | ||||
Au LUC/OK | Ag LUC/OK | AuEq(1) | Au | Ag | AuEq(1) | ||
MEASURED RESOURCES | |||||||
Oxide | 221 | 2.74 | 18.25 | 3 | 19 | 130 | 21 |
COSE(2) | - | - | - | - | - | - | - |
Fresh(3) | 1,693 | 2.91 | 51.7 | 3.65 | 158 | 2,814 | 199 |
Sub-Total | 1,914 | 2.89 | 47.84 | 3.58 | 178 | 2,944 | 220 |
INDICATED RESOURCES | |||||||
Oxide | 1,971,594 | 1.06 | 32.6 | 1.53 | 66,942 | 2,066,450 | 96,701 |
COSE(2) | 472,426 | 12.63 | 469.96 | 19.4 | 191,800 | 7,138,215 | 294,596 |
Fresh(3) | 8,111,721 | 1.7 | 46.49 | 2.37 | 443,100 | 12,125,600 | 617,711 |
Sub-Total | 10,555,741 | 2.07 | 62.85 | 2.97 | 701,842 | 21,330,265 | 1,009,008 |
MEASURED + INDICATED RESOURCES | |||||||
Oxide | 1,971,815 | 1.06 | 32.6 | 1.53 | 66,962 | 2,066,580 | 96,723 |
COSE(2) | 472,426 | 12.63 | 469.96 | 19.4 | 191,800 | 7,138,215 | 294,596 |
Fresh(3) | 8,113,414 | 1.7 | 46.5 | 2.37 | 443,258 | 12,128,414 | 617,910 |
Sub-Total | 10,557,655 | 2.07 | 62.85 | 2.97 | 702,019 | 21,333,209 | 1,009,228 |
INFERRED RESOURCES | |||||||
Oxide | 528,193 | 0.68 | 23.15 | 1.01 | 11,468 | 393,044 | 17,127 |
COSE(2) | - | - | - | - | - | - | - |
Fresh(3) | 4,366,559 | 1.45 | 36.14 | 1.97 | 203,929 | 5,073,580 | 276,999 |
Sub-Total | 4,894,752 | 1.37 | 34.74 | 1.87 | 215,396 | 5,466,624 | 294,126 |
Total | 15,452,407 | 1.85 | 53.94 | 2.62 | 917,416 | 26,799,833 | 1,303,355 |
Table 2: JORC Code Compliant Net Resource for Cap-Oeste below the current pit attributable to the Company - October 2017
Net Attributable Resources to the Company (PGSA)(4) | |||||||
Geo Ox | Tonnes | Grade (g/t) | Metal (oz) | ||||
Au LUC/OK | Ag LUC/OK | AuEq(1) | Au | Ag | AuEq(1) | ||
MEASURED RESOURCES | |||||||
Oxide | 199 | 2.74 | 18.25 | 3 | 18 | 117 | 19 |
COSE(2) | - | - | - | - | - | - | - |
Fresh(3) | 1,524 | 2.91 | 51.7 | 3.65 | 142 | 2,533 | 179 |
Sub-Total | 1,723 | 2.89 | 47.84 | 3.58 | 160 | 2,649 | 198 |
INDICATED RESOURCES | |||||||
Oxide | 1,774,435 | 1.06 | 32.6 | 1.53 | 60,248 | 1,859,805 | 87,031 |
COSE(2) | 425,183 | 12.63 | 469.96 | 19.4 | 172,620 | 6,424,394 | 265,136 |
Fresh(3) | 7,300,549 | 1.7 | 46.49 | 2.37 | 398,790 | 10,913,040 | 555,940 |
Sub-Total | 9,500,167 | 2.07 | 62.85 | 2.97 | 631,658 | 19,197,239 | 908,108 |
MEASURED + INDICATED RESOURCES | |||||||
Oxide | 1,774,634 | 1.06 | 32.6 | 1.53 | 60,266 | 1,859,922 | 87,050 |
COSE(2) | 425,183 | 12.63 | 469.96 | 19.4 | 172,620 | 6,424,394 | 265,136 |
Fresh(3) | 7,302,073 | 1.7 | 46.5 | 2.37 | 398,932 | 10,915,572 | 556,119 |
Sub-Total | 9,501,890 | 2.07 | 62.85 | 2.97 | 631,817 | 19,199,888 | 908,306 |
INFERRED RESOURCES | |||||||
Oxide | 475,374 | 0.68 | 23.15 | 1.01 | 10,321 | 353,740 | 15,415 |
COSE(2) | - | - | - | - | - | - | - |
Fresh(3) | 3,929,903 | 1.45 | 36.14 | 1.97 | 183,535 | 4,566,221 | 249,299 |
Sub-Total | 4,405,277 | 1.37 | 34.74 | 1.87 | 193,857 | 4,919,962 | 264,714 |
Total | 13,907,166 | 1.85 | 53.94 | 2.62 | 825,674 | 24,119,849 | 1,173,019 |
Notes:
(1) AuEq values are calculated at a ratio of 69:1 Ag to Au.
(2) COSE style mineralisation with free milling cyanide recoverable Au and Ag.
(3) Fresh refractory sulphide mineralisation.
(4) Cap-Oeste is 100% owned by Patagonia Gold S.A. ("PGSA"), which is the operator of Cap-Oeste. The Company is interested in 90% of PGSA, with the remaining 10% being held by Santa Cruz government's wholly-owned mining company, Fomento Minero de Santa Cruz Sociedad del Estado. The net attributable resource, shows the 90% of the Cap-Oeste resource which is attributable to the Company.
(5) Resources were calculated on a block model of 0.5 g/t AuEq and at US$1,250 Au and US$18 Ag per oz.
Glossary of technical terms
Ag | the chemical symbol for Silver |
Au | the chemical symbol for Gold |
AuEq | gold equivalent, taking into account the amount of AG, calculated at a ratio of 69:1 Ag to Au |
g/t | grammes per tonne |
Indicated Resource | that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation |
Inferred Resource | that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity |
JORC | the Joint Ore Reserves Committee: The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia |
LUK/OK | Localised uniform conditioning/Ordinary Kriging |
Measured Resource | that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation where data and samples are gathered |
Mineral Resource | a concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling |
Moz | million ounces |
oz | ounces |
t | tonnes |
Matthew Boyes, (BSC. Geology, Fellow AusIMM) Chief Operating Officer for the Company and a qualified person as defined in Canadian National Instrument 43-101, has reviewed and verified all scientific or technical mining disclosure contained in this announcement.
- Ends -
About Patagonia Gold
Patagonia Gold Plc is a mining company that seeks to grow shareholder value through exploration, development and production of gold and silver projects in the southern Patagonia region of Argentina. The Company is primarily focused on three projects: the flagship Cap-Oeste project, the La Manchuria project and the Lomada heap leach project. Patagonia Gold, indirectly through its subsidiaries or under option agreements, has mineral rights to over 220 properties in several provinces of Argentina, Chile and Uruguay and is one of the largest landholders in the province of Santa Cruz.
For more information, please contact:
Christopher van Tienhoven, Chief Executive Officer
Patagonia Gold Plc
Tel: +54 11 5278 6950
Angela Hallett and Richard Tulloch
Strand Hanson Limited (Nominated Adviser and Broker)
Tel: +44 (0)20 7409 3494
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").