Don Mario advances to feasibility

After studying a variety of development proposals from third parties, management of Orvana Minerals (ORV-T) has decided to retain a 100% interest in the Don Mario gold-copper project in eastern Bolivia, with the intention of advancing the property to the development stage.

The company says none of the proposals “adequately recognized the values” inherent in the project, such as the potential to add to reserves or to develop previously identified mineralized prospects on its other concessions in the district.

Consequently, Orvana entered into an agreement with a major institution for the sale, on a private placement basis, of 5.7 million units at a price of $1.75 per unit. The proceeds of $10 million (or $14 million if warrants are exercised) will be used to fund a feasibility study and carry out additional exploration drilling.

Once a positive bankable study is in hand, the company says it will be able to complete negotiations with commercial lenders for project financings of as much as US$40 million, which would be sufficient to fund development of a higher-grade zone at Don Mario.

If all goes as planned, commercial production could be achieved within the next 24 to 30 months, at a rate averaging more than 100,000 oz. gold per year, using conventional mining and metallurgical methods.

Previous studies by Billiton and Pincock Allen & Holt (modified by subsequent drilling and in-house evaluations) show that the project could produce gold at a cash cost of US$100-120 per oz., based on minable reserves of 1.5 million tonnes grading 13 grams gold per tonne.

In addition to the high-grade Lower Mineralized zone, Don Mario contains an Upper Mineralized zone that contains a resource estimated at 5.5 million tonnes grading about 1.5 grams gold and 1.5% copper. The metallurgy of this zone will be investigated as part of the feasibility study. Preliminary estimates show that the zone could support an open-pit operation at a daily rate of 3,250 tonnes for five additional years after mining of the Lower Mineralized zone has been completed, thus ensuring at least a decade of mining at Don Mario.