Gran Colombia charts way forward for Marmato
Canadian midtier miner Gran Colombia Gold announced on Tuesday that it had received the results of a preliminary economic assessment (PEA) for the Marmato project, in Colombia, charting a course to optimise the mine plan and increase production.
The company said that the PEA would set a path to “significantly” expand production at the mine, which is forecast to produce between 24 000 oz and 26 000 oz this year.
Gran Colombia is planning to spin off Marmato and last week entered into a letter of intent with TSX-V-listed Bluenose Gold to dispose of certain mining assets. These include the existing producing underground gold mine, including the right to mine in the lower portion of the Echandia licence area, the existing 1 200 t/d processing plant and the area encompassing the Deep Zone mineralisation, all located within the mining licence area referred to as Zona Baja.
Gran Colombia will retain its existing ownership of the mining licences in the areas known as Zona Alta and Echandia.
The Marmato mine in Zona Baja will ultimately comprise two distinct operations, the existing Upper Zone operation and a new Deep Zone operation which sits directly below the Upper Zone vein system.
“The PEA charts a course whereby the immediate implementation of an optimised mine plan in the upper existing mine at Marmato, much like we did a few years ago at Segovia, will increase production and free cash flow starting in 2020,” said Gran Colombia executive chairperson Serafino Iacono.
The PEA life-of-mine (LoM) production schedule foresees a total of 26.4-million tonnes of mineralised material being processed over a 19-year mine life resulting in a total of 2.2-million ounces of gold produced at an average cash cost of $799/oz.
In the study, the Upper Zone is envisioned to produce 5.5-million tonnes of mineralised material, primarily from the vein system, over a 16-year life with an average LoM head grade of 3.8 g/t, resulting in total gold production of 0.6-million ounces, or about 27% of total gold production from both the Upper and Deep Zones.
This would be accomplished through the implementation of an optimised mine plan, including the strict control of dilution and mine recovery, that would increase production from the current 25 000 oz/y to a range of between 35 000 oz/y and 40 000 oz/y, starting in 2020.
To accomplish the optimised mine plan, the company would invest $12-million over the next two years in mine development and equipment.
The new Deep Zone should come on stream in 2023, increasing total gold production to more than 150 000 oz/y from 2024 through 2027 and then averaging at 100 000 oz/y over the next nine years of operation.
The initial capital cost, to be incurred between 2020 and 2022, required for the Deep Zone mining operation is estimated at $269-million. At a gold price of $1 300/oz, the total LoM undiscounted after-tax free cash flow from mining operations amounted to $448-million.
At a 5% discount rate, the net present value of the total LoM after-tax free cash flow is $207-million. Before financing, the project has a 20% internal rate of return and payback by 2026.
“We expect to complete the transaction with Bluenose and the equity private placement in December and we are proceeding with the prefeasibility study to be finalised by mid-2020,” said Iacono.
Gran Colombia also announced an updated mineral resource estimate for Marmato.
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