TORONTO (miningweekly.com) – Minera IRL, which trades on the Aim, TSX and BVL markets, could see a benefit in merging with a gold company of a similar size, executive chairperson Courtney Chamberlain said on Thursday.

"I think that we and other companies should be looking at 'synergistic' corporate transactions, where one and one might make three or five, or something like that, for the shareholders," he said in an interview in Toronto.

Chamberlain said that he could envisage a merger involving a firm of a similar size, with complementary assets, "and preferably Latin America focused".

Minera IRL currently produces about 40 000 oz/y from a small mine in Peru, but plans to join the ranks of 200 000-oz/y gold producers within the next four or five years.

The Don Nicolas project, which the firm took over last year when it bought Hidefield Gold, is expected to add about 60 000 oz/y and could start-up by the end of 2012.

The company also plans to complete a prefeasibility study early next year on its Ollachea project, in Peru, and will then take another year to bring the asset to feasibility stage.

If all goes to plan, construction of a 100 000-oz/y-plus operation at Ollachea could be under way in early 2012, with first production in 2014.

By that time, Chamberlain, who is based in Lima, said he would like to have a pipeline of projects in hand , ready for the next stage of growth for the company.

At Don Nicolas, several targets have already been identified that the company plans to pursue, and Chamberlain describes the operation being studied at the moment as a "starter mine", which he hopes will turn out to be the first in a new mining district.

The firm will also consider corporate activity, and although it is not out actively looking at the moment, Chamberlain indicated that he might start sniffing for deals "in the not-too-distant future".

FUNDING

Mineral IRL listed on the TSX in April and had planned to sell shares in Toronto last month, but cancelled the C$25-million financing, citing "volatile" equity markets, and opted instead for a $20-million facility with Macquarie Bank.

Chamberlain said that the company does want to issue shares in Toronto though, to improve liquidity on what is seen as a key market for junior mining companies.

But between the Macquarie facility and cash flow from Corihuarmi, the firm has the means to support itself through to mid-2011 or so, which means it can pick its own timing and is not under pressure to go out and raise funds.

There is no time frame at the moment for a potential equity financing. Chamberlain said.

Looking further ahead, the Don Nicolas and Ollachea projects are expected to require a combined $200-million (about $40-million and $155-million respectively), which Minera IRL plans to raise through a combination of debt and equity.

It is a lot of money for a company with a market capitalisation of under C$100-million, but should be doable, given the strong gold price and appetite for the yellow metal, Chamberlain said.

"We've got a number of banks that are interested in helping us on that."

He expects that gold prices will continue to rise along the trajectory of the last two or three years, but does not see any sharp gains.

"I am not of the $2 000/oz-school. Personally, I would be very comfortable with the $1 100- to $1 300/oz-range."