An independent scoping study has concluded that Aquiline Resources‘ (AQI-V) Calcatreu project in Argentina’s Rio Negro province contains enough gold and silver to warrant mining.
The study, completed by Micon International, is based on a newly completed resource estimate, which pegs Calcatreu’s indicated resources at around 6.2 million tonnes grading 3 grams gold and 28.1 grams silver per tonne, for 602,540 oz. of contained gold and 5.6 million oz. of contained 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 of 3 grams gold and 28.1 grams silver are found in the Nelson area. Likewise, most of the 1.9 million tonnes of inferred material grading 2.1 grams gold and 19.4 grams silver are contained in Vein 49.
The estimates are based on historical drilling plus 163 holes totalling more than 18,000 metres sunk by Aquiline since November 2003. They also employ a cutoff grade of 0.55 gram gold. In 2003, Micon’s review of an estimate by previous owner Newmont Mining (NEM-N) identified an indicated resource of 1.4 million tonnes grading 5 grams gold and 39 grams silver per tonne, and 4.5 million tonnes of inferred material grades 2.8 grams gold and 26.9 grams silver. The recent drilling boosted much of that inferred material to the indicated category.
Micon’s study envisages a series of open-pits on the Vein 49 and Nelson deposits. The zones will be mined by backhoe at a rate of 700,000 tonnes per year, followed a few years on by a possible underground mining phase at Vein 49. Definition of the underground operations requires more infill drilling. Waste rock will be stockpiled 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 a rate of 2,000 tonnes per day. Merrill Crowe zinc precipitation will be employed 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 processing plant tailings to be treated to destroy cyanide.
A diesel generator rated at 5 to 5.5 megawatts will power the operation, though the company is investigating the use of a hybrid diesel/wind power plant. Calcatreu would be staffed primarily by Argentineans, with as many of those coming from the town of Jacobacci, 90 km away; on-site accommodations are planned.
The capital cost of the proposed operation comes to US$43.5 million, with nearly half of that 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 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, 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 7; cumulative cash flow over the 7-year life span is US$31.8 million.
In addition to ongoing infill drilling, Aquiline is also in the midst of a hydrological program at Calcatreu. The results will be incorporated into the project’s environmental baseline study in anticipation of a full environmental impact assessment report.
The project is subject to a 2.5% net smelter return royalty payable to Newmont. The major also retains a back-in right over much of the property; the central mining claim areas of Nabel, which includes the Vein 49 and Nelson areas, are excluded.
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