VANCOUVER (miningweekly.com) – Despite permit delays, it’s been a good year for Condor Gold as it continues work on proving up a large commercial reserve on its 100%-owned La India project, in Nicaragua.
Chairperson and CEO Mark Child is currently on a three-week visit to Nicaragua to smooth over relations with the government and push for the timely issuance of its mining permits, which would represent a significant milestone for the company and materially de-risk the project.
Child explained to Mining Weekly Online in an interview that the company is pushing ahead with its two-pronged strategy to advance the La India project, focusing on permitting and building a base case 2 800 t/d processing plant, producing 100 000 oz/y of gold, while it continues to drive its exploration strategy to expand mineral resources by another one- to two-million ounces of yellow metal.
“It’s been a good year for us. We have raised about £2-million, funding about 8 500 m of drilling and geochemical testing, focused on expanding the main vein area. The team is also stepping out into the surrounding region,” he said, adding that of the 78 000 m of drilling the project has seen to date, Condor drilled about 60 000 m.
In parallel, the company is busy re-logging core to update the lithological model. According to Child, Condor has sunk about $20-million into the La India project over the last 18 to 20 months, while it entered permitting negotiations with government. The project currently holds 2.33-million ounces of gold at a grade of 4 g/t.
Child pointed out that permitting progress has been frustrated by administrative delays. However, the company has used the additional time on its hands to get on with exploration
Child joined Condor’s board in May 2006 and became CEO in July 2011. He acquired the concessions that comprise La India project and has raised the finance and developed the project into what it is today.
He has been with the company for 11 years and has seen it grow from a small concession on the historic brownfield La India site, into a multimillion-ounce project. While the company has been focused on growing its portfolio of concessions to double the land package over the last four years, the geology team struck it lucky and found another vein on the property.
In November, Condor announced the results of a 5 922-m drill programme on the Mestiza Vein Set at La India, and found a high-grade oreshoot called ‘Big Bend’ on the Tatiana vein that is defined over a strike length of 450 m and depth of 200 m. It has mineralised true widths up to 4.6 m (averaging 2.2 m over the main mineralised section), in addition to a hanging wall vein up to 6.1 m true width (averaging 1 m).
LSE- Aim-listed Condor is currently in the advanced stages of gaining a TSX listing, which is expected to start trading either by year end, or early in the New Year. With an increased exposure to the Canadian market, Child expects the company will further strengthen its board and boost its marketing budget, which, with enough interest from the investment community, could lead to an equity rerating.
He bemoaned the fact that Condor’s equity is undervalued when compared against peers. However, heavyweight mining investor Ross Beaty participating in the last two financings, added credence to the company’s strategy, when he sunk substantial funding into the company. According to Child, following a site visit by Beaty’s geologic advisers, they were convinced that there is much more potential within the claims than first believed.
“If we can find another vein on our prospective regional landholdings, it will add to the critical mass La India needs to attract the attention of a potential suitor. We are looking to take the core area of three veins to at least three-million ounces and possibly tot five-million ounces, from about 2.3-million ounces now. We are looking for about 40% more economical ounces to take the project to the next phase,” he said.
Child noted that is a “no brainer” to drill down dip and along strike. There’s also significant resource potential at depth. “We think there’s another million ounces down there somewhere,” he advised.
Should the company be successful in growing its reserves, it would consider building an expanded scenario producing 165 000 oz/y, by adding feeder pits and underground operations. A prefeasibility study on La India has formulated a mine plan based on a mineral reserve of 6.9-million tonnes grading 3 g/t gold for 675 000 oz gold, producing 80 000 oz/y of gold for seven years.
Child advised that the permitting sticking point surrounds community resettlement because of the project. Child said that government has given the company assurances that it needs and supports the mine development, but added that government will have to strike a settlement deal with the community.
Gold is the third biggest export of Nicaragua and the socialist government has a slogan that embraces mining as critical to open doors to the communities’ economic growth.
Child described the Nicaraguan economy as booming, playing catch-up with other developing economies in the region. “When one looks around the world regarding where one can mine, Nicaragua is one of the best jurisdictions in the world.”
Child is optimistic that government will move on the La India permits soon, seeing that it has permitted three other openpit developments in Nicaragua in the past three months for B2Gold and Golden Reign.
Condor has put together a strong corporate social responsibility team to conduct the company’s community engagement efforts to World Bank Standards, and which also owns a 7.3% stake through the International Financial Corporation.
“It’s an old mining town that relied on the mine until its closure in 1956. Ninety per cent of the community welcomes the mine redevelopment, but there remain feelings of hostility among a small group of residents. We are engaging the communities as we speak. There is a lot of support too for the creation of 500 new jobs and to help pull people from hazardous artisanal mining,” he said.
He pointed out that epithermal systems usually have the potential to produce for decades and up to half a century.
He says the company is in for the long haul and plans to see the project through to the construction and operating phases. However, there is a market for regional plays such as La India, and he is keenly aware of the “big boys” skulking on the side lines and willing to pay premiums for district-scale projects, as their hunt to replace mined ounces intensifies. “An endorsement from a major miner will go a long way to revive investor interest,” he said.
Child further noted that at the average grade of 4 g/t gold, the project delivers an all-in sustaining cost metric of about $700/oz, attesting to the project’s robust economics.
Child said that once the mining permit has been issued, it will take about another year of infill drilling to aid in a feasibility study to arrive at a construction decision. He has already been approached by a host of potential debt funding partners, while other funding options such as streaming deals remain open.