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•• Monthly Mining Bulletin Nº22
Noviembre - 2013 - PANORAMA MINERO
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Mining in Argentina – What happened in October?

October was an important month in Argentina’s mining industry with relevant news, from production and construction results, up to financing. Maybe, Pascua-Lama’s deferral could be one of the most important news: Barrick Gold announced that construction would continue in subsequent stages, reexamining technical details. Also, the top gold producer announced a strong quarter for Veladero mine.

Also in San Juan, Yamana Gold showed interesting numbers coming from Gualcamayo, announcing important results related to exploration and underground development. Yamana Gold is developing Cerro Moro (Santa Cruz province), one of the most promising gold projects in Argentina.

In the Patagonia Region, Toronto based Goldcorp announced Cerro Negro update, a gold deposit that will become one of the most important mines in Argentina.

Minera Santa Cruz –a joint venture between Hochschild Mining (51%) and McEwen Mining (49%) - is the company that manages San Jose mine: this high silver grade orebody is progressing well quarter after quarter.

In the construction side, Orocobre lithium project –Olaroz- is on time within budget to begin production in the first half of 2014.

Rojo Grande, an important gold mineralization within Del Carmen project, shows good results coming from the Preliminary Economic Assessment, bringing hope to this project near Veladero and Pascua-Lama.

Minera IRL Limited and Argentex Mining obtained enough funds to continue with the development of Don Nicolas and Pinguino projects, respectively.

Barrick Gold– Veladero and Pascua-Lama Updates
Barrick Gold reported its financial and operating results for the third quarter of 2013.

Yamana Gold – Gualcamayo and Cerro Moro updates
Yamana Gold Inc. announced its financial and operating results for the third quarter 2013.

Goldcorp - Cerro Negro Update
Goldcorp Inc. reported adjusted quarterly revenues of $1.2 billion, generating adjusted net earnings of $190 million, or $0.23 per share, compared to $441 million, or $0.54 per share, in the third quarter of 2012.

Construction Update on the Olaroz Lithium Project
Orocobre Limited commented on the progress on the Olaroz Lithium Project (Jujuy province) continues to proceed on time and within budget.

San Jose Mine Third Quarter 2013 Production Results
McEwen Mining Inc. commented production results for the third quarter of 2013. During the third quarter, 36,495 gold eq. oz. (*) (**) (20,483 gold oz. and 832,594 silver oz.) were produced.

Positive Preliminary Economic Assessment for Rojo Grande, Del Carmen Project
Malbex Resources Inc. announced the results of a Preliminary Economic Assessment ("PEA") for the Rojo Grande mineralization at its 100% owned Del Carmen Project in San Juan Province.

Coro Provides Update on San Jorge
Coro Mining Corp. announced that, further to its news release of September 5th 2013 regarding discussions with a third party group potentially interested in acquiring an interest in the Company's San Jorge project

Minera IRL Announces Closing of US$3 Million Subscription with CIMINAS
Minera IRL Limited reported that it has closed the previously announced offering of 9,146,341 ordinary shares ("Shares") of the Company (the "Subscription") to Compañía Inversora de Minas S.A. ("CIMINAS") at a price of US$0.328 per Share (£0.204 per Share, converted at the Bank of Canada daily noon rate on 7 October 2013 and rounded to the nearest penny) for gross proceeds of US$3 million.

Argentex Mining Issues 1,276,613 Common Shares on Partial Conversion of US$2.3M Convertible Debenture
Argentex Mining Corporation announced the conversion of an additional US$350,000 of the outstanding principal amount of the Convertible Debenture held by Austral Gold Argentina S.A. In the partial conversion, which was effected on October 16, 2013 at a conversion price of US$0.274163 per Unit, Argentex issued 1,276,613 Units, consisting of 1,276,613 common shares and 638,307 warrants.

Are you looking for a Rep in Argentina? Please contact: informes@panoramaminero.com.ar

Barrick Gold– Veladero and Pascua-Lama Updates

 
 

Barrick Gold reported its financial and operating results for the third quarter of 2013. Highlights include:

•Strong operating results and cash flow; improved 2013 guidance gold production of 1.85 million ounces at all-in sustaining costs (AISC) of $916 per ounce copper production of 139 million pounds at C3 fully allocated costs of $2.15 per pound narrowed the range and lowered top end of operating cost guidance for gold; improved copper guidance on Lumwana turnaround adjusted net earnings of $0.58 billion ($0.58 per share) and adjusted operating cash flow of $1.30 billion
•Suspension of construction activities at the Pascua-Lama project will further reduce 2014 capital costs by up to $1.0 billion
•Targeting annual cost savings of $500 million from a flatter operating model and other initiatives
•Portfolio optimization progress with sale of Barrick Energy, Yilgarn South mines, and Pierina closure

Pascua-Lama Project Deferral

Barrick has decided to temporarily suspend construction activities at Pascua-Lama (bi national project that straddles Chile and San Juan province), except those required for environmental protection and regulatory compliance. This decision will postpone and reduce near term cash outlays, and allows the company to proceed with development at the appropriate time under a more effective, phased approach. The decision to re-start will depend on improved project economics such as go-forward costs, the outlook for metal prices, and reduced uncertainty associated with legal and other regulatory requirements.

The ramp-down will be carried out in a way that allows for an efficient and effective re-start when conditions warrant. In the meantime, the company will update and refine capital cost estimates and stage the project's remaining development into distinct phases with specific work programs, budgets and objectives. This staged approach will also facilitate more efficient planning and execution, more effective capital deployment, and improved cost control. The company will also continue to explore further opportunities to improve the project's risk-adjusted returns, such as strategic partnerships and royalty or other income streaming agreements. Most importantly, Barrick's decision will maintain the option value of this major world class resource and its potential to generate significant cash flows during its 25 year mine life and beyond.

Veladero mine (San Juan) and other South American properties

South America produced 0.33 million ounces at AISC of $831 per ounce. The Veladero mine contributed 0.15 million ounces at AISC of $874 per ounce, reflecting lower grades and silver credits compared to the first half of the year. Lagunas Norte produced 0.14 million ounces at AISC of $696 per ounce. Production at Lagunas Norte is expected to increase in the fourth quarter on higher grades and tons as anticipated in the mine plan and as a result of the newly commissioned carbon-in-column plant, which allows for greater solution flow to the expanded leach pad. The company has decided to initiate closure of the Pierina mine in Peru.

Full year production for South America is now expected to be at the high end of the original guidance range of 1.25-1.35 million ounces. Full year AISC are anticipated to be at the low end of the original guidance range of $875-$925 per ounce.

 

Yamana Gold – Gualcamayo and Cerro Moro updates

 
 

Yamana Gold Inc. announced its financial and operating results for the third quarter 2013. Highlights include:

•Production of 306,935 gold equivalent ounces ("GEO")(1), an increase of 4% over the second quarter of 2013 - Gold production of 263,830 ounces & Silver production of 2.2 million ounces
•All-in sustaining costs of $730 per GEO on a by-product basis, a 20% or $186 per GEO reduction from second quarter 2013
•All-in sustaining costs of $888 per GEO on a co-product basis, a 12% and 7% or approximately $126 and $62 per GEO reduction from first and second quarter 2013
•Revenues of $456.7 million, a 7% increase from second quarter 2013
•Net earnings of $43.5 million or $0.06 per share
•Adjusted earnings of $69.5 million or $0.09 per share, a 39% increase from second quarter 2013
•Cash flows from operations after changes in non-cash working capital of $99.0 million
•Cash flows generated from operations before changes in non-cash working capital of $177.4 million, a 18% increase from second quarter 2013

Gualcamayo mine (San Juan province)

Gualcamayo produced 27,678 ounces of gold in the third quarter compared with 38,248 ounces produced in the third quarter of 2012. Lower production was the result of lower recovery, partly offset by improved feed grade. Ore processed declined as compared to the third quarter of 2012. Production of the quarter was sourced primarily from stockpiled material of Phase II being placed in the new Valle Norte heap leach pad as the mining operations at Gualcamayo were transitioning from QDD Main Phase II to Phase III. Transition work was completed in the quarter and production at Gualcamayo is expected to increase for the balance of the year.

Co-product cash costs were $919 per ounce in the quarter ended September 30, 2013 compared with $669 per ounce in the third quarter of 2012. Higher co-product cash costs were mainly due to lower production absorbing a higher proportion of fixed costs on a per ounce basis and increased maintenance. Lower production was caused by the delay in accessing the Phase III and QDD Lower West (QDDLW). The setback in the assembly of the conveyor line that brings ore from QDDLW underground and AIM open-pit deposits, which was partially mitigated by contracting a hauling fleet to transport ore from QDDLW and AIM at higher costs, also adversely impacted co-product cash costs. Most of the equipment has been delivered and is now operating and with the planned reduction of contractors, mining costs are expected to decrease in the fourth quarter. Underground development of QDDLW was largely completed during the quarter with a production contribution expected late in the fourth quarter.

The Company has initiated a plan to reduce costs and once fully executed will return the focus to the production growth objectives at Gualcamayo. The objective is part of the overall strategy and business plan to maximize margins and profitability at producing mines whose all-in sustaining co-product cash costs exceed the average cost structure in order to maintain competitiveness of these mines in a volatile gold price environment. The Company believes this is a prudent approach given the current reality of market conditions and metal price levels.

The continued exploration success of QDDLW which is expected to result in increases to the mineral resources in 2013 has led to the initiation of a conceptual study on the options for processing these newly discovered ounces. Work on the study continued in the quarter and is expected to be completed by the end of the year.

Exploration at Gualcamayo has a continued focus on drilling targets surrounding the Rodado and QDD Lower West ("QDDLW") systems. A total of 11,886 metres distributed in 41 holes were completed during the first nine months of 2013. Due to positive results returned from drill holes testing the Rodado SW and beneath QDDLW, additional funding was reallocated to further testing of the Rodado SW mineral body which remains open along strike and at depth. This new sulfidic mineralization is being studied internally as potential feed for a sulfide treatment plant.

Cerro Moro project (Santa Cruz province)

Cerro Moro currently hosts an indicated mineral resource of 1.95 million GEO and an inferred mineral resource of 490,000 GEO.

The Company has engaged in pre-development work by way of starting a production-ready decline targeting the largest of the known ore bodies, Escondida. The project remains on budget.

In addition to providing flexibility to advance the timeline for development, the production-ready decline would provide a platform for further exploration work and permit access to the ore body, providing greater certainty and knowledge of its physical properties and grade continuity. Technical and trade-off studies have been completed which support continuation to a full feasibility study for the project that is currently underway. This feasibility study will provide an update to the feasibility study previously filed which supports the already approved environmental impact assessment. Based on these studies, the feasibility study will consider a mine plan combining both open-pit (30%) and underground (70%) mining operations to sustain a process plant with a throughput rate of approximately 1,000 tonnes per day and an expected recovery of approximately 200,000 GEO per annum. Work on the feasibility study is continuing and is expected to be completed sometime in 2014. Definitive metallurgical test work, geotechnical and hydrology studies to support the final plant design are in progress. Depending on the outcome of the studies and subsequent construction decision, production should begin in 2016.

 

Goldcorp - Cerro Negro Update

 
 

Goldcorp Inc. reported adjusted quarterly revenues of $1.2 billion, generating adjusted net earnings of $190 million, or $0.23 per share, compared to $441 million, or $0.54 per share, in the third quarter of 2012. Revenues were $929 million and net earnings were $5 million in the quarter compared to net earnings of $498 million in the third quarter of 2012. Adjusted operating cash flow was $375 million, or $0.46 per share, compared to $686 million, or $0.85 per share, in the third quarter of 2012.

Third Quarter 2013 Highlights

• Adjusted revenues totaled $1.2 billion.
• Gold sales totaled 652,100 ounces1 on gold production of 637,100 ounces.
• All-in sustaining costs totaled $992 per ounce; cash costs totaled $551 per ounce on a by-product basis and $706 per ounce on a co-product basis.
• Adjusted operating cash flow totaled $375 million, or $0.46 per share.
• Adjusted net earnings were $190 million, or $0.23 per share.
• Dividends paid amounted to $122 million.
• Revised initial cost and schedule at Cerro Negro project in Santa Cruz Province to affect 2014 outlook.

Cerro Negro Update

Construction continued to advance in the third quarter of 2013 in key areas of the Cerro Negro project (Santa Cruz province, Patagonia region) including plant construction, infrastructure, and mine development. However, the project has been subject to a number of challenges, including an approximate six-month delay in the start of construction for the main power transmission line resulting from the delay in issuance of necessary permits; significant in-country inflation at an annualized rate of approximately 25 to 30%, without a corresponding decline in the Peso exchange rate; labour and contractor productivity issues; and uncertainty related to the recently-enacted Resource Tax imposed by the Provincial Government of Santa Cruz.

As a result of these challenges, the Company has elected to defer certain capital spending at Cerro Negro, including the suspension of all exploration activity, and deferral of further development of the Mariana Norte deposit until late 2014. These challenges have resulted in a revised schedule and initial capital cost estimate for Cerro Negro.

The Company now expects first gold production in mid-year 2014 with commercial production expected in the fourth quarter of 2014. The revised initial capital cost estimate is now expected to be between $1.6 and $1.8 billion, including anticipated continued inflation at current rates and an assumed exchange rate for the Peso of 6:1 US$ for 2014. The Company now expects estimated gold production of between 130,000 and 180,000 ounces in 2014.

As a result of previous exploration success in the Eureka and Mariana Central veins and the delay of plant startup, the suspension of development of Mariana Norte is not expected to impact gold production levels during the first five years of operations.

 

Construction Update on the Olaroz Lithium Project

 
 

Orocobre Limited commented on the progress on the Olaroz Lithium Project (Jujuy province) continues to proceed on time and within budget.

The first pumping and filling of evaporation pond 4B occurred at the beginning of August, four weeks ahead of schedule. All brine bores have been drilled and bore equipment and infrastructure for brine supply is 88% complete. Progress is on schedule to reach the full rate by November as planned.

The construction of the evaporation ponds is ahead of schedule with 87% of earthworks completed. The evaporation pond lining program is on schedule.

Other notable events are as follows:
•Water supply wells have been completed
•Camp has been completed and is operational
•The construction and fit out of the laboratory has been completed
•Erection of the lime plant is more than 50% complete
•The engineering design of the lithium carbonate plant has been completed and the lithium carbonate plant is under construction
•The final stage of the roadworks is nearing completion
•The gas supply and distribution system are 90% complete

The project continues to proceed on time and within budget. A total of approximately US$133m has been spent or committed via executed contracts in the construction project to date.

The Company continues to follow the "Jujuy First" strategy to successfully work with suppliers and the employment bureau to focus on the hiring of local people from the communities of Olaroz, Huancar, Puesto Sey, Pastos Chicos, Catua, Susques, Jama, El Toro, Coranzulí, San Juan and Abrapampa. The Company recently sponsored the Olaroz Chico student graduation trip to Salta and Jujuy cities.

The project implementation is through EPCM (Engineering, Procurement and Construction Management) with a high proportion of local involvement through construction and supply contracts and local employment. The unique community and shared value policy continue to be a key success factor, training local people under the supervision of high quality experienced professionals.

The Olaroz lithium project is being developed by Orocobre (66.5%) with partners Toyota Tsusho Corporation ("TTC") (25%) and the Jujuy Province mining and energy company, JEMSE (8.5%) with a construction budget of US$229m including contingency. First production is scheduled for the end of the second quarter, 2014.

 

San Jose Mine Third Quarter 2013 Production Results

 
 

McEwen Mining Inc. commented production results for the third quarter of 2013. During the third quarter, 36,495 gold eq. oz. (*) (**) (20,483 gold oz. and 832,594 silver oz.) were produced. This is 47% higher than the same period in 2012 and 2% higher than Q2, 2013. In the past 9 months ended September 30, 2013, McEwen Mining has produced 102,288 gold eq oz., and is on track to meet forecasted annual production of 130,000 gold eq oz.

* Gold eq oz. = Gold equivalent ounces
** Gold equivalent ounces are calculated at a ratio of 52:1.

tabla


 

Positive Preliminary Economic Assessment for Rojo Grande, Del Carmen Project

 
 

Malbex Resources Inc. announced the results of a Preliminary Economic Assessment ("PEA") for the Rojo Grande mineralization at its 100% owned Del Carmen Project in San Juan Province. The PEA was prepared by Micon International Limited in accordance with the requirements of Canadian National Instrument 43-101 "Standards of Disclosure for Mineral Projects" ("NI 43-101").

The PEA indicates that the Del Carmen project could generate average annual heap leach gold production of 105,000 oz. at $650/oz. total cash cost after by-product credits. The results of the PEA indicate that the project may be economically viable at current gold prices. Highlights of the results of the PEA are as follows:

•Projected average annual production of approximately 105,000 ounces of gold over an 8 year mine life (total 842,000 ounces gold and 3.8 million ounces of silver), at an estimated cash cost including royalties of $650 per ounce (oz.) after by-product credits.
•Pre-tax Net Present Value (NPV) of $166 million at $1,400 per oz. gold and 7% discount rate, giving an Internal Rate of Return (IRR) of 17% and a payback period of about 4.7 years.
•Estimated direct initial capital expenditure of $183 million plus approximately $73 million in indirects, EPCM, first fills and contingency costs.

The PEA contemplates a conventional open pit mining operation with heap-leach gold recovery. Contract mining would be employed in the initial years of mining to pre-strip almost the entire pit ( strip ratio in first two years is 8.4:1 reducing to 1.2:1 in later years.). The mine plan would call for the extraction of 37.5 million tonnes of heap leach material at an average grade of 0.87 gram gold per tonne (gpt) yielding 842,000 ounces of recoverable gold.

tabla

The 0.3 g/t gold equivalent cut-off grade was derived from an assumed open pit/heap leach operation with recoveries of 70% for gold and 40% for silver, a mining cost of US$1.50/tonne for mineralized material and $1.40/tonne waste, process cost of US$3.50/tonne and general & administrative costs of US$2.50/tonne. The costs were derived from similar operations and the recoveries from initial metallurgical testwork. Assumed prices of $1,125/oz. for gold and $20/oz. for silver, based on 3-year trailing averages, were also employed.

The Del Carmen property is located wholly within Argentina. It is comprised of eleven contiguous mining concessions with a total area of 15,129 ha in the El Indio Gold Belt. The project is located in the Valle del Cura on the eastern flank of the Andes Cordillera at elevations between 3700 and 5200 masl. It is adjacent to the Chile/Argentina border approximately 280 km northwest of the provincial capital city of San Juan and can be reached by road in about 4 to 4.5 hours.

 

Coro Provides Update on San Jorge

 
 

Coro Mining Corp. announced that, further to its news release of September 5th 2013 regarding discussions with a third party group potentially interested in acquiring an interest in the Company's San Jorge project, located in the province of Mendoza, Coro has granted this group an extension to the exclusivity period until November 4th 2013. The Company confirms that no binding agreements have been entered into at this time and that there is no certainty or guarantee that any such binding agreements will be concluded, or that the third party group in question will ultimately acquire any interest in the San Jorge project.

 


 

Minera IRL Announces Closing of US$3 Million Subscription with CIMINAS

 
 

Minera IRL Limited reported that it has closed the previously announced offering of 9,146,341 ordinary shares ("Shares") of the Company (the "Subscription") to Compañía Inversora de Minas S.A. ("CIMINAS") at a price of US$0.328 per Share (£0.204 per Share, converted at the Bank of Canada daily noon rate on 7 October 2013 and rounded to the nearest penny) for gross proceeds of US$3 million. This Subscription by CIMINAS is a component of the $80 million financing package for the development of the Don Nicolas Gold Project in Santa Cruz Province, announced on 19 August 2013.

Application has been made for the Shares to be admitted to trading on AIM ("Admission"). The Shares will rank pari passu with the existing ordinary shares in the Company and it is expected that dealings in these Shares will now commence on 11 October 2013. Following Admission, Minera IRL will have 182,824,225 ordinary shares in issue. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FSA's Disclosure and Transparency Rules.

The net proceeds from the Subscription will be used toward the development of the Don Nicolas project, completing exploration activities on Minera IRL Patagonia S.A.'s mineral concession and for general corporate expenditures within MIRL IRL Patagonia S.A. Minera IRL is the operator and owns 51% equity interest in Minera IRL Patagonia S.A.

Previously Minera IRL and LionGold ceased talks regarding potential takeover offer.

 

Argentex Mining Issues 1,276,613 Common Shares on Partial Conversion of US$2.3M Convertible Debenture

 
 

Argentex Mining Corporation announced the conversion of an additional US$350,000 of the outstanding principal amount of the Convertible Debenture held by Austral Gold Argentina S.A. In the partial conversion, which was effected on October 16, 2013 at a conversion price of US$0.274163 per Unit, Argentex issued 1,276,613 Units, consisting of 1,276,613 common shares and 638,307 warrants. Each whole warrant entitles the holder to purchase one additional common share at an exercise price of CDN$0.40 until July 2, 2018.

After adjusting for this partial conversion, the principal balance remaining under the Convertible Debenture is US$650,000. Under the terms of the Convertible Debenture, this amount can be repaid only by conversion into additional Units at the conversion price of US$0.274163 per Unit. These conversions coincide with repayments to Argentex of principal amounts outstanding under a U.S. dollar linked loan intended to minimise currency risk. Loan repayments are made in Argentine pesos in amounts linked to the value of the U.S. dollar at the time of repayment.

Argentex Mining Corporation is an exploration company focused on developing its advanced Pinguino silver-gold project located in Santa Cruz, Patagonia. In total, Argentex owns 100% of 100,000+ hectares of highly prospective land located in the Santa Cruz and Rio Negro provinces.


 
  Panorama Minero
Buenos Aires - Argentina
Phone: (054-11) 4952-1117

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