An independent scoping study has concluded that
The study, completed by Micon International, is based on a newly completed resource estimate, which pegs Calcatreu’s indicated resource at around 6.2 million tonnes grading 3 grams gold and 28.1 grams silver per tonne, equivalent to 602,540 oz. gold and 5.6 million oz. silver.
The bulk of the indicated material (5 million tonnes running 3.3 grams gold and 29.8 grams silver) is contained in the Vein 49 area. The remaining 1.1 million tonnes grading 3 grams gold and 28.1 grams silver are in the nearby Nelson area. Likewise, most of the 1.9 million tonnes of inferred material grading 2.1 grams gold and 19.4 grams silver are in Vein 49. The Vein 49 and Nelson deposits outcrop at surface over a total strike length of more than 1.5 km.
The estimates are based on historical drilling plus 163 holes totalling more than 18,000 metres sunk by Aquiline since November 2003. A cutoff grade of 0.55 gram gold was used. In 2003, Micon’s review of an estimate by previous owner
Micon’s study envisages a series of open pits on the Vein 49 and Nelson deposits. The zones will be mined by backhoe at the rate of 700,000 tonnes per year, followed, a few years on, by a possible underground mining phase on Vein 49. Waste rock will be piled some 750 metres from the open pits.
Following crushing, grinding, and gravity concentration, higher-grade ore will be processed via conventional cyanide tank leaching at the daily rate of 2,000 tonnes. Merrill-Crowe zinc precipitation will be used to recover the precious metals. Low-grade material will be heap leached.
Initial tests indicate that combined gravity concentration plus cyanidation can recover 93% of the gold and 67% of the silver; recovery by heap leaching is pegged at 75%. Plans also call for the plant tailings to be treated to destroy cyanide.
A diesel generator rated at 5-5.5 MW will power the operation, though the company is investigating the use of a hybrid diesel/wind power plant. Calcatreu will be staffed primarily by Argentinians, with many of them coming from the town of Jacobacci, 90 km away; on-site accommodations are planned.
The proposed operation’s capital cost comes to US$43.5 million, nearly half of which is required for the 2,000-tonne-per-day recovery plant. Life-of-mine direct operating costs are estimated at US$22 per tonne of ore mined, with total operating costs (net of silver credits) pegged at US$191 per oz.
The study’s base case generates an internal rate of return (IRR) of 20%, based on a gold price of US$400 per oz. and a silver price of US$6 per oz. At metal prices 10% above and below those levels, the IRR shifts to 27.7% and 11.5%. Similarly, the base case’s net present value (at a 10% discount) of US$11 million varies from US$20.1 million to US$1.6 million. Projected cash flow declines from US$27 million during the first year to US$3 million in year seven; cumulative cash flow over the 7-year life span is US$31.8 million.
Deep drilling
Also included in the study is a potentially mineable, underground indicated resource totalling 771,404 diluted tonnes grading 3.4 grams gold and 35.7 grams silver, with another 599,040 tonnes of inferred resources running 3.3 grams gold and 33.1 grams silver. Preliminary plans call for these resources to be mined via a ramp driven from a lower bench in the 130-metre deep Vein 49 pit or from an adit outside the pit.
In late June, drilling at depth on Vein 49 turned up 5 metres grading 15.2 grams gold and 215 grams silver per tonne in hole 259, beginning 238 metres down-hole. At the time, the hole represented Aquiline’s deepest intersection at Calcatreu.
Encouraged, Aquiline reviewed some previous deep holes at a higher, 3-gram gold cutoff. The six holes generally grade 5-11 grams gold and 20-183 grams silver over widths of 1-5 metres, and at depths of around 180-230 metres.
In September, another batch of results from deep drilling on Vein 49 included hole 279, which cut 4.5 metres of 7.3 grams gold and 77 grams silver at 302 metres below surface, and about 75 metres below hole 259.
Other deep intersections on Vein 49 include the following:
— hole 264 — 4.2 metres (beginning at 251.5 metres below surface) grading 1.4 grams gold and 6.9 grams silver per tonnes;
— hole 266 — 13 metres (from 234 metres) of 1.1 grams gold and 6.7 grams silver;
— hole 278 — 3.9 metres (from 292.9 metres) of 2.4 grams gold and 12.9 grams silver; and
— hole 280 — 6 metres (from 313.9 metres) of 1.8 grams gold and 14 grams silver.
Definition of a possible underground mining phase still requires more infill drilling, and Aquiline plans to test Vein 49 (which remains open at depth) to depths between 300 and 600 metres.
The advanced Vein 49 and Nelson areas make up just a small part of Aquiline’s 2,900-sq.-km land package in the area. The project is home to nine other less-explored gold and gold-silver prospects, including the Amistad vein to the north, where grab-sampling previously yielded 38 grams gold and trenching returned 3.4 grams gold over 8 metres.
At Viuda de Castro, 12 km north of Vein 49, previous trenching returned up to 9 metres grading 2.3 grams gold per tonne. Another trench in the area ran about 6 grams over 6 metres. Trenching on the Belen vein returned 4.3 grams gold over 7 metres, and limited drilling hit 2.9 grams gold over 12 metres. Exploration of the prospects will be funded via cash flow from Calcatreu.
Meanwhile, on the Flamingo property, 90 km southeast of Calcatreu in Chubut province, Aquiline has discovered an epithermal vein system.
Reconnaissance sampling there returned up to 9.7 grams gold and 6.9 grams silver per tonne, plus 1.9% lead, 1.2% copper and 1.2% zinc. The veins strike up to 3 km and vary in width from 0.5 to 10 metres. More than a third of 52 chip samples collected along the 3-km strike exceeded 0.1 gram gold; the best value was 9.7 grams. The quartz veins are hosted by the Taquetren Formation’s arkosic greywackes and lithic tuffs.
Flamingo’s epithermal system runs parallel to the Gastre fault system, which is home to
Back at Calcatreu, Aquiline is in the midst of a US$600,000 water management program aimed at identifying, measuring and monitoring water resources in anticipation of an environmental impact assessment (EIA), planned for submission later this year or early next year. Approval is expected to take at least 45 days.
Looking ahead, Aquiline intends to complete additional metallurgical tests and infill drilling in March and April in preparation for a definitive feasibility study, which is slated for delivery by June. Pending a positive production decision, which is expected by the end of the second quarter of 2005, a year-long construction period would begin in September. If all goes according to plan, the project would produce its first ore in the second quarter of 2006.
The Calcatreu project is subject to a 3% royalty payable to the government, with another 2.5% royalty due to Newmont. The major also retains a back-in right over much of the property (the Vein 49 and Nelson areas are excluded).
Aquiline has arranged a non-brokered private placement of up to 2.5 million units priced at $1.30 apiece. A unit comprises one share accompanied by half a non-transferable share purchase warrant; a full warrant is good for one Aquiline share at $1.55 per share for two years. The transaction has yet to be approved by regulators.
In other news, Aquiline recently amended its statement of claim with the Supreme Court of British Columbia. The co
mpany is seeking a constructive trust over IMA Exploration’s Navidad project and has added to its claim IMA’s wholly owned Argentinean subsidiary, Inversiones Mineras Argentinas. The court action has also been expanded to cover all other properties in the vicinity of Navidad that were subsequently staked by IMA.
Aquiline originally filed its claim in early March, asserting that IMA had unlawfully used confidential regional exploration data to identify and acquire the Navidad project, discovered in December 2002.
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