Goldrock nears construction decision with positive Lindero feasibility study

VANCOUVER – With a new name, a revamped management team, and now a feasibility study for its flagship Lindero gold project in Argentina, Goldrock Mines (GRM-V) is striding towards its goal of becoming a gold producer.

Goldrock started work on the Lindero feasibility study in mid-2012, when the company was still known as Mansfield Minerals. Now the work has paid off. The Lindero study outlines an operation producing an average of 109,000 oz. gold annually for nine years for an all-in cost of US$703 per oz.

Moreover, the study predicts it will cost just US$155 million to build the mine and, with a 33.4% after-tax internal rate of return (IRR), that investment would be recouped in two years.

Lindero is in Argentina’s northwestern Salta province. Goldrock geologists identified mineralization at the site in 1999, noting potassic alteration that ultimately led to the discovery of a gold-bearing dioritic porphyry.

The porphyry now hosts resources totaling 128.7 million measured and indicated tonnes grading 0.53 gram gold per tonne, plus 59.7 million inferred tonnes averaging 0.37 gram gold. To transform that resource into a mineable reserve, Goldrock designed open pits using a cut-off grade of 0.35 gram gold, which resulted in a reserve of 65.5 million proven and probable tonnes grading 0.72 gram gold, for 1.5 million contained ounces.

The Lindero reserve is amenable to open pit mining, and 68.3% of the contained gold can be recovered via three-stage crushing and conventional heap leaching followed by carbon adsorption-desorption processing. The operation would churn through 18,750 tonnes of ore a day. In the first three years a higher-grade ore zone would enable gold production to average 128,000 oz. a year. Over the mine’s nine-year lifespan, output is expected to average 109,000 oz. annually.

It would cost US$155.3 million to get the planned Lindero mine into operation, plus another US$9.6 million over the first few years to complete the heap leach facility. Based on a gold price of US$1,400 per oz. and a 5% discount rate, the project carries an after-tax net present value of US$215 million. Once operational the Lindero mine is expected to generate an after-tax IRR of 33.4%, enabling capital payback in two years.

Importantly, Lindero is already permitted for construction, having received its environmental permit in late 2011. Goldrock says the authorities in Salta province want Lindero to become the province’s first gold mine.

The project sits 250 kilometres due west of the city of Salta and is road accessible. The surrounding Puna district is only sparsely populated but the area is well serviced with infrastructure, including an airstrip, roads, gas pipelines, and an international rail line. The railway connects the city of Salta with the deep-sea port of Puerto Angamos (also known as Antofagasta) on the Chilean coast.

Power for a mine at Lindero would come from a natural gas generation. The Salta government built a gas line through the Puna region specifically to encourage mining and other forms of economic development. Goldrock could tap into this line in the village of Pocitis, 160 km by road from the mine site. Rather than build a pipeline, Goldrock plans to transport gas from Pocitis to Lindero by truck.

Mining operations at Lindero are divided into four stages. Contract miners would be employed in stages 1 and 2, during which time the strip ratio would average just 0.48 tonnes of waste for each tonne of ore. In phases 3 and 4, the strip ratio rises and mining would shift to owner-operated equipment. Over its lifespan the mine’s strip ratio average 1.79 to 1.

With a feasibility study in one hand and a permit for development in the other, Goldrock says it is now focused on securing the financing it needs to build Lindero. This challenge represents a significant departure from the exploration-oriented goals that have driven the company over the last decade, which is why Goldrock recently revamped its management team.

New additions to the management team include Paul Matysek, now Goldrock’s president and CEO, as well as David Keough, who was appointed to the newly-created role of chief operating officer. Matysek brings with him an impressive resume of success: in the last two years he led Potash One into a friendly U$434-million merger with German company K&S Ag and then took Lithium One into a $112-million merger with Galaxy Resources (GXY-A). Both of those deals followed Matysek’s success with Energy Metals, a uranium company that he founded and grew until it was taken over for $1.5 billion in 2007.

With new management Goldrock also adopted a new name. The company dropped the Mansfield Minerals banner just as it announced a long-term objective of becoming a 250,000-oz.-per-year gold producer. The company plans to achieve that goal through both organic growth, anchored in the development of a mine at Lindero, and through the acquisition of near-term production assets.

Lindero might contribute more to Goldrock’s gold output goal than the current study suggests if the nearby Arizaro discovery continues to grow. Arizaro is located 3 km southeast of Lindero and a recent 13-hole drill program produced some promising results.

Goldrock discovered mineralization at the Arizaro porphyry target in late 2011 when a drill returned 122 metres grading 0.75 gram gold and 0.24% copper. Recent drilling returned such results as 34 metres grading 0.73 gram gold and 0.19% copper, 206 metres of 0.43 gram gold and 0.19% copper, 96 metres of 0.43 gram gold and 0.14% copper, and 339 metres of 0.44 gram gold and 0.16% copper.

At Arizaro higher-grade copper mineralization is associated with a magnetite breccia, which is surrounded by a fractured diorite porphyry unit with a well-defined quartz-chalcopyrite stockwork. The system covers a surface area of 500 metres by 600 metres and mineralization starts at surface. To date mineralization has been tracked to 300 metres depth and the system remains open in all directions.

Goldrock plans to calculate an initial resource for Arizaro sometime over the next 18 months.

On news of the Lindero feasibility study Goldrock shares fell 7¢ to 58¢. The company has a 52-week trading range of 55¢ to 90¢ and has 65 million shares outstanding.