Jaguar boosts Turmalina resources

A recently completed 39-hole drilling campaign has allowed Jaguar Mining (JAG-T, JAGNF-O) to boost by 41% resources at its Turmalina gold mine in the ‘Iron Quadrangle’ region of Minas Gerais state, Brazil.

The bigger measured and indicated resource also sports a higher average grade — 7 grams gold per tonne versus the previous 6.85 grams.

Most of the holes focussed on extensions of the nearby Main and Northeast orebodies, between the 350-metre and 500-metre levels. The rest of the holes were targeted above the 350-metre level in the existing mine area.

Highlights include 5.1 metres running 13.2 grams gold per tonne, 7 metres averaging 7.3 grams gold, 3.8 metres at 11.3 grams, and 6.8 metres at 5.8 grams. In all, 30 holes cut economic grades and widths; only two holes failed to cut significant mineralization. Some of the better results occur in the deepest intervals on the Main zone.

Measured and indicated resources in the Main zone now tip the scales at just shy of 1.9 million tonnes running 7.9 grams gold per tonne, for 477,000 contained ounces of gold. The Northeast zone is home to 612,000 tonnes averaging 4.3 grams gold, for 85,000 oz.

The drilling converted about three-quarters of the previous inferred resource, which now stands at 178,000 tonnes averaging 5.3 grams between the two zones, around 100 metres apart. The estimates are based on a cutoff grade of 1 gram gold and a gold price of US$375 per oz.

At the same time, Jaguar says nearly all of the previous resources have been converted into reserves. The reserve estimate and mine plan will be revised once ongoing drilling wraps up early in the second quarter. Drilling continues to test deeper extensions of the zones, which remain open at depth.

Turmalina is scheduled to begin producing at 60,000 oz. per year in the fourth quarter. Operating costs at the US$25.4-million project are pegged at US$176 per oz. The company recently received the initial drawdown from US$14 million in debt financing for the project. The mine already has some 3.9 km of existing underground ramp development.

Meanwhile, a recently completed feasibility study at the Sabara heap-leach gold mine to the east pegs reserves at 2 million tonnes running 2.8 grams gold. The 400,000 tonne-per-year operation cranked up earlier this year, and is expected to annually churn out 26,000 oz. over 5 years. Total cash cost are forecast at US$182 per oz.

Elsewhere, feasibility studies for the Santa Barbara-Pilar and Paci Fencia projects are slated for delivery later this year. Jaguar expects to be producing 235,000 oz. of gold per year by 2008.

Development of the Brazilian projects will be funded via a recently increased bought deal financing involving the sale of 10.1 million shares at $5.25 apiece for gross proceeds of $53 million. Exercise of an underwriter’s option on another 1.3 million like-priced shares would boost proceeds to more than $60 million. The option is exercisable up to 2 days before closing, which is expected by Mar. 22.