Aurelian releases 13.7M oz. gold resource for Ecuadors Fruta del Norte

Aurelian Resources (ARU-T) is sitting on one heck of a lot of gold.

The Canadian companys wholly owned Fruta del Norte (FDN) gold project in southeastern Ecuador released an NI 43-101-compliant inferred mineral resource estimate of 58.9 million tonnes grading 7.23 grams per tonne gold and 11.8 grams per tonne silver.

At a cutoff grade of 2.3 grams per tonne gold equivalent, that makes for a remarkable 13.7 million contained ounces gold and 22.4 million contained ounces silver.

Its hard to believe that it was only 17 months ago that we first discovered FDN and we now have 13.7 million ounces of gold, Patrick Anderson, Aurelians president and chief executive, exclaimed on a conference call to analysts and investors this morning. This is a spectacular deposit.

Metallurgical testing has also confirmed that gold recoveries in the 85 to 95% range can be reached using a process that combines gravity separation of coarse free gold followed by flotation and gold recovery by carbon in leach.

The 2.3 grams per tonne gold equivalent cutoff grade used to report the resource was derived from an overall site cost of US$37 per tonne.

Gold equivalent ounces were calculated on the basis of US$550 per oz. gold and US$10 per oz. silver.

The inferred resource was determined from a database of 85 drill holes, 45,051 metres of drilling and 22,942 gold assays.

The dimensions of the mineralized envelope are 1,300 metres in length (north-south), 80 to 200 metres in width (east-west), and up to 400 metres in depth.

There arent too many precedents for this resource, noted George Bee, Aurelians chief operating officer. We have a super resource to work with here a unique situation where we have a very well-defined package of high-grade rocks.

Aurelian describes FDN as an intermediate sulphidation epithermal gold-silver system, hosted in andesitic volcanics and buried inside a Jurassic pull-apart basin that essentially preserves the bulk of the epithermal system.

Bee, speaking from the Ecuadorian city of Quito, said Phase I of the project will take between three and five years and includes the building of a 3.5 km decline from surface, which should take about 18 months to complete. He expects to get the permit to begin construction of the decline, next year.

Development will be funded by cash flow from the project. Bee sees significant early production and significant cash flow from the deposits high-grade ore zones.

I think the idea is to start off getting into the higher grade zones and support an underground mining operation with a 3,000- to 5,000-tonne-per-day range and focus on the higher grades, he said. As the highest grades wane a bit, we could be into the lower-grade material looking to increase our throughput to maintain a fairly consistent ounce-throughput in the long term.

Nevertheless, he pointed out, its still early days and Aurelian has a lot of planning to do.

The bulk sample is going to be contingent on us getting underground and doing a lot of definition drilling, Bee added.

Of course the project doesnt come without its risks. Ecuador has seen much political turmoil in recent years with eight presidents in the last decade.

The countrys current president, Rafael Correa, is among a group of emerging left-leaning leaders to have won democratic elections in Latin America over the past few years.

Correa, a trained economist educated in the U.S., blames poverty and social inequality in Ecuador on failed economic policies imposed by the US and international institutions like the World Bank. He also accuses the countrys political elite of pillaging the countrys natural resources.

At the start of his successful 2006 presidential campaign, Correa founded the PAIS Alliance, a new party that espouses political sovereignty, regional integration and economic relief for Ecuadors poor.

Correas PAIS Alliance won a landslide victory in Constituent Assembly elections held on September 30.

His majority will present stability to the countryincluding changes to the mining laws which the government tells us to expect by next summer, Anderson reassured participants on the conference call this morning.

Later this year the government will be able to provide us with much more clarity on the proposed mining laws. The mining minister has said that the government supports large-scale mining. The government also says royalties will be in line with international standards.

Anderson added that Aurelian has had many constructive meetings with government members and these will continue as the Toronto-based company continues to explain the benefits of its gold project to them.

We flat-out asked the government whether they planned to do any nationalization of mining programs specifically ours and they said no, Anderson explained. They said they need responsible foreign investment.

Added Anderson: I think there were some sensational statements made about shutting down foreign mining operations. Take what you read in the press with a grain of salt.

On the Toronto Stock Exchange, news of the positive resource estimate sent Aurelians shares up sharply by $1.02 to close at $8.02 apiece, on a trading volume of 6.1 million.