Condor Gold eyes resolution to slow permitting in Nicaragua

After a nearly two-year delay, Condor Gold (TSX: COG; US-OTC: CNDGF; LON: CNR) is confident the Nicaraguan government will soon issue the company an environmental permit to build and operate a 2,800-tonne-pe- day processing plant at its La India gold project in the country’s northwest.

Condor attributes the initial delay to Nicaragua’s November 2016 presidential elections. Along the way it also decided to adjust its mine plan.

Under the original design, the company would have had to move 330 houses, or 1,000 people.

“In January of this year we filed with the government to redesign the mine to avoid any resettlement at all,” Condor CEO Mark Child says during a telephone interview with The Northern Miner. “And that went down very well.”

Three Nicaraguan ministries — environment, energy and mines, and forestry — visited La India for a final site inspection this March. They came back with a list of 10 technical questions, wanting, for example, Condor to perform more hydrology on its proposed tailings storage facility.

The final permitting stage in Nicaragua is a public consultation. Condor held theirs in July, and nearly 500 people attended from the village of La Cruz de La India. In the run up to the public consultation Condor bolstered its social team and began distributing 360, five-gallon drinking water containers on a weekly basis.

Condor staff runs a pump discharge test at La India. Credit: Condor Gold.

“Permits in Nicaragua are very much granted by the bottom up,” Child says. “You have to win over the community.”

A government committee takes community feedback and determines whether to grant the permits. Golden Reign Resources (TSXV: GRR; US-OTC: GRGNF) held its public consultation in August 2017. The company was trying to permit its 500-tonne-per-day San Albino gold project in Nueva Segovia, Nicaragua. It received its permit less than three weeks later.

“Nicaragua’s going through quite a bit of turmoil at the moment, but the ministries are working,” Child explains. “Two and a half weeks ago I sat down with the minister of mines. Gold is the third biggest export there. They see it as a strategic asset. This creates jobs.”

Nicaragua’s November 2016 elections saw Daniel Ortega re-elected as president for the third consecutive term.

In April 2018, he proposed reforms to the nation’s social security system that lowered retired worker’s pensions. Violent protesters soon pressured Ortega into withdrawing the reforms.

The protesters continued, however, demanding Ortega and his Sandinista party resign. Though Ortega was once a popular figure, his opposition claims he has become an autocrat bent on establishing a family dynasty.

Violence escalated. Molotov cocktails collided with rubber bullets. Blockades built by locals created gridlock. During a nearly three-month period, some Condor staff could not get home to certain parts of the country.

Condor diamond drilling at La India. Credit: Condor Gold.

“I thought at the time: this is a moment of madness,” Child says.

Tensions have cooled, but remain. The government has removed blockades. People are able to see their families.

Still, 300 people have since died in clashes between protesters and paramilitary gunmen.

“The political risk factor’s gone up, so raising cash going forward will be more difficult,” Child says. “We don’t know with any great certainty how this is all going to pan out, but I’m seeing stability coming back in and things returning to normal.”

He says Condor knows what it wants to do over the next 12 months, from the time it receives its permits.

The company wants to upgrade its 2014 prefeasibility study to a bankable feasibilitystudy. In the earlier study, Condor only considered part of the property, the La India vein set, where it could mine 6.9 million tonnes at 3 grams gold per tonne over eight years from a single open pit. The project would produce 74,000 oz. gold and 99,200 oz. silver per year. 

At a US$1,250 gold price, the project would have a US$91.7-million, after-tax net present value at a 5% discount rate and a 22% after-tax internal rate of return. It would require a US$110-million initial capital expense.

The company later prepared a preliminary economic assessment detailing two options for progressing the project.

The first would add two feeder pits called America and Central Breccia that would increase the plant feed to 1.2 million tonnes per year from 800,000 tonnes per year.

The second would add two underground operations, one at La India and one at America. It would increase production to 1.6 million tonnes per year.

The first scenario increases the after-tax net present value to US$124.2 million at a 5% discount rate. The second increases it to US$186.6 million at 5% discount rate.

The open-pit reserve at La India is 6.9 million probable tonnes at 3 grams gold and 5.3 grams silver for 675,000 oz. gold and 1.18 million oz. silver.

La India and America together contain 9.5 million indicated tonnes at 3.5 grams gold for 1.08 million oz. gold and 5.8 grams silver for 1.79 million oz. silver and 5 million inferred tonnes at 4.2 grams gold for 692,000 oz. gold.

Another zone not included in previous studies, Mestiza, contains 1.5 million inferred tonnes at 7.5 grams gold for 330,000 oz. gold as of a 2014 estimate.

The company also wants to fine-tune its mining rate.

Measuring the America vein at Condor Gold’s La India gold property in Nicaragua in 2011. Credit: Condor Gold.

“Now we can either mine at the prefeasibility study level, or do it in six years at a faster mining rate of 100,000 oz. gold a year,” Child says. “We’re trying to get that optimal schedule.”

It also wants to further drill its feeder pits, with the hope of adding 20,000 to 40,000 oz. gold per year and another million ounces of gold to the overall resource. It says it has a lot of drill-ready targets. Once it gets its permits, however it will still need to raise more cash.

The company raised £2.5 million in March, but says that only allows it to get its permits, with up to 18 months of working capital.

“If we came back and said, ‘by the way, we’ve got the permits,’ that’s a different story,” Child says.

“With the Canadian listing I’d like to get that sort of household-name miner in Canada to take 10% of the company, because that will draw attention of the Canadian retail, and people will sit up and start to take notice.”

Condor listed on the Toronto Stock Exchange this January. It has listed on the London Stock Exchange for 12 years — the same amount of time it has operated in Nicaragua.

Shares of Condor are valued at 61¢ with a 52-week range of 47¢ to $1.75. They have been declining since January. The company has a $48-million market capitalization.

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