Greystar releases underground study on Angostura

Vancouver – Restructured Greystar Resources (GSL-T) has released an underground-only scoping study on its beleaguered Angostura gold-silver project in northeastern Colombia.

The company was forced to look at a pure underground option after it became clear that the Colombian government would not alter existing rules protecting the high-elevation paramo ecosystem to allow an open-pit mine at the Angostura project. With the restrictions in mind, the mine layout was designed to avoid surface accesses, portals and roads higher than 3,000 metres above sea level.

The study establishes that a 4,000-tonne-per-day underground mine could be viable, with the potential to produce 1.9 million oz. gold, 7.7 million oz. silver and roughly 228,000 lbs. copper over a 14-year mine life.

Greystar looked at roasting, bio-oxidation and pressure oxidation for processing, with roasting coming in with the strongest economics.

Initial capital costs are estimated at US$301.6 million, while average total cash costs are expected to be US$455 per oz., net of silver and copper credits

The pre-tax internal rate of return came in at 21.4%, and the pre-tax net present value, using a 5% discount, at US$400.2 million. The numbers were based on US$1,015 per oz. gold and US$15.85 per oz. silver, factoring in somewhat higher prices for the first two years.

Those number contrast with the 2009 open pit heap leach study, which found that using US$650 per oz. gold, the company could produce 4.2 million oz. gold though heap leaching and 3.5 million oz. through conventional processing, plus 34.5 million oz. silver over a 15-year mine life.

Financially the 2009 study established a net present value, with a 6% discount, of US$942 million with an internal rate of return 24.9%. Capital costs were US$638 million.

The new study excluded mineral resources outside the stopes that make up additional indicated resources of 1.44 million indicated oz. gold and 1 million inferred oz. gold, both with a 3 grams gold cutoff. The company also sees room for improved metrics by optimizing the cut-off grade and by expanding the resource that remains open at depth.

The company recently made significant changes to its management team in light of the failure to permit the Angostura project. New York hedge fund Amber Capital LP, which controls roughly 18% of Greystar’s shares, appointed Juan Orduz and Rafael Nieto Loaiza as directors, and will replace the rest of the board at the company’s annual general meeting on May 18.

Greystar’s shares dropped 2¢ to close at $3.44 on the day on 421,000 shares traded. The company has 52-week share price range between $2.26 and $5.80 and has 84.2 million shares outstanding.