Gold takes the spotlight at Aldridge’s Yenipazar

Aldridge Minerals (AGM-V) aims to capitalize on Turkey’s mining boom, which has drawn substantial international curiosity and investment.  

Aldridge has been on a bit of a roll recently with upgraded metallurgy and an expanded resource estimate fuelling market enthusiasm surrounding its polymetallic Yenipazar volcanogenic massive sulphide (VMS) deposit, 220 km southeast of Ankara.

The company’s preliminary economic assessment (PEA) in early 2011 was based entirely on reverse-circulation drilling and showed low metallurgical recoveries that raised doubts about the viability of any future mining.

Aldridge has since eliminated both problems with 7,200 metres of diamond drilling that boosted resources, and the study of an upgraded  processing circuit that would improve metal recoveries.

“As a result of our metallurgical advances, gold is now the metal with the highest economic value,” CEO Mario Caron said in a conference call. “When we published the PEA, metallurgy was preliminary in nature. We were contemplating the production of a copper concentrate as well as a lead-zinc concentrate, with only about a third of the gold reporting to the copper concentrate, and the majority of the silver reporting to the lead.”

Yenipazar’s resource stands at 27 million tonnes grading 1.04 grams gold per tonne, 31 grams silver, 0.3% copper, 1.04% lead and 1.4% zinc for a gold-equivalent grade of 3.05 grams. The deposit contains 900,000 oz. gold, 27 million oz. silver, 177 lb. copper, 612 million lb. lead and 824 million lb. zinc.

“For this resource update we decided that it would be helpful to report the outcome in terms of gold-equivalent ounces, and equivalent grades,” Caron explained. “The primary purpose of this decision is to facilitate the benchmarking of our deposit against other VMS projects . . . reporting gold equivalents was made possible because of the significant progress we’ve made towards increasing gold recoveries.”

Under the original model, Aldridge’s 5,700-tonne-per-day processing plant would produce concentrates with recovery rates of 77% copper, 78% lead, 59% zinc, 37% gold and 57% silver.

Following the additional study, the recoveries are now clocking in at 92% gold and 90% silver. Base-metal recoveries remain relatively unchanged.

“Our tests have identified a process that contemplates a separate gold circuit, followed by sequential flotation of our base metals,” Caron said. “The ongoing optimization has led to an increase in precious recoveries. This supports our longstanding view that the low recovery rates in our original PEA were not a reflection of a fatal flaw in the deposit, but rather the result of a lack of metallurgical test work.”

Aldridge is banking on the upgrade in processing to improve the economics of the Yenipazar project, which carries a US$255-million net present value and a 23.2% internal rate of return at a 5% discount rate. The open-pit operation would have cost a relatively modest US$198 million in initial capital.

As part of the upgrade, Aldridge would expand its planned mill, bumping throughput levels by 32% to 7,500 tonnes per day, or roughly 2.5 million tonnes per year. According to Caron, the capital cost for the mill expansion hasn’t yet been pinned down, but a final number will be incorporated into a bankable feasibility study released by year-end. The company is aiming to complete a US$1.3-million, 10,000-metre diamond drill program before August and increase precious metal grades seen in previous reverse-circulation holes.

In addition to the 1.7-km strike of the Yenipazar deposit, Aldridge has identified three mineralized outcrops 2 km north that are slated for further exploration.

The company holds 100% of a 100-sq.-km mineral licence it acquired through an earn-in agreement with Anatolia Minerals — now part of Alacer Gold (ASR-T).

Caron said Aldridge is fully funded for its feasibility stage work  thanks to a US$11.2-million financing it completed with Turkish holding company ANT Holding Anonim in February. The financing made ANT a 30% holder in Aldridge through the issuance of  16 million shares at 70¢ apiece, and it holds strategic advantages for the project going forward.

“Development funding will be addressed through a combination of debt and equity,” Caron said. “We expect our partnership with ANT, our newest major shareholder, will offer access to debt financing in the Turkish banking system.”

Aldridge remains tightly controlled following the placement, with 53 million shares outstanding — 36% under director or insider ownership — and a presstime market capitalization of US$35 million.

The company has enjoyed a buoyant market rally, with shares jumping 52%, or 23¢ since June 11. Yenipazar’s upgraded resource fuelled investor enthusiasm as Aldridge jumped 22%, or 12¢, en route to a 66¢ presstime close on daily 561,500 share-trade volume highs.