Aurogin gears up for gold production in Guatemala (May 01, 2006)

With plant construction going ahead at its operations in Guatemala, the market is recognizing Aurogin Resources (AUQ-V, AROG-O) for making good on one of its two core assets.

In the two days of trading after the company announced heap-leach pad construction at its El Sastre project, the company’s shares climbed roughly 30%, or 8.5, to 36.5 with roughly two million shares traded.

“It’s just a matter of following through on promises,” says Aurogin president John Paterson. “Like getting it into production and getting the resource up to a million ounces.”

Paterson says the Toronto-based junior will start pouring gold at its El Sastre Main zone — one of four zones at the project — by the fourth quarter of 2006.

And while gold is being processed there, Aurogin will be drilling at the other three zones in an effort to hit the 1-million-oz. mark.

While the company is putting roughly $500,000 into heap-leach pad and metallurgical plant construction at the Main zone, Paterson says $1 million will go into exploring the three zones around it. The company hopes to have a feasibility study on the surrounding zones completed in 2007.

Current estimates compliant with National Instrument 43-101 put the resource at the El Sastre Main and Lupita zones at 685,000 oz. gold.

Lupita hosts an inferred resource of 13 million tonnes averaging 1.25 grams gold per tonne for 518,000 oz. At the El Sastre Main zone, the indicated resource stands at 370,000 tonnes averaging 4.14 grams gold for 49,251 oz.; inferred resources measure 1.2 million tonnes averaging 3.13 grams gold for 117,265 oz.

The company describes El Sastre Main as a high-grade, near-surface oxide gold deposit. Aurogin says it will produce 20,000 oz. gold in its first year of operation, with costs slated to come in at just under US$200 per oz.

Paterson says gold production will initially move at a modest pace while the company gets a better feel for things.

“When you start mining, you don’t know how it will behave on the heap. It’s a big jump from column testing to actual production,” Paterson says. “We’re starting off small with 15,000 tonnes in the first lift of material. We’ll leach it and keep expanding it as we can.”

El Sastre is one of two core projects for Aurogin, the other being Lone Mountain in Nevada. Lone Mountain is on the Battle Mountain-Cortez trend, which has produced some 23 million oz. gold over the past 30 years, making it the second-most-productive belt in the state after the Carlin district.