Kinbauri tops 2M oz. gold at El Valle and Carles

Vancouver — Resources at Kinbauri Gold’s (KNB-V, KINBF-o) El Valle and Carles mines in northwestern Spain continue to grow in the wake of a completed 30,000- metre drilling campaign. All told, the projects now top 2 million oz. gold.

When Kinbauri picked up the past-producing mines last year for US$5 million from Rio Narcea Gold Mines (which Lundin Mines [LUN-T, LMC-n] subsequently acquired for around $1 billion), Kinbauri pegged the resource there at 2.6 million measured and indicated tonnes grading 5.7 grams gold per tonne and 2.3 million measured and indicated tonnes at 1.13% copper. The inferred resource was 3.2 million tonnes of 8.3 grams gold and 1.6 million tonnes at 0.84% copper.

Kinbauri first increased the size of the resource in January this year, to an indicated 4.2 million tonnes grading 5.4 grams gold and 4.1 million tonnes of 1% copper. Inferred resources were estimated at 4.5 million tonnes grading 6.7 grams gold and 0.56% copper.

And now, with new drill results to draw from, Kinbauri has grown the resource to 6.2 million measured and indicated tonnes grading 4.6 grams gold and 0.85% copper, plus 6.6 million inferred tonnes at 5.2 grams gold and 0.55% copper.

The latest numbers increase by 26% the contained measured and indicated gold to 916,000 oz. Contained copper in the same resource categories jumped 30% to 113 million lbs. As for the inferred resource, contained gold increased 5% to 1.1 million oz. while contained copper increased 48% to 74 million lbs.

On news of the updated resource, Kinbauri’s share price held at 36.

The company’s president and CEO Vern Rampton says that although a scoping study considering a variety of options to reopen the mines won’t be out until December, “we’ve already made a decision to go to feasibility.”

When it bought the mines, located about 35 km west of Oviedo, in Asturias, Kinbauri inherited a sizable amount of infrastructure — both a blessing and a curse. The El Valle mill comes capable of processing 750,000 tonnes a year, but underground workings are an issue.

Confronting Kinbauri is the onerous length of existing ramps to mineralized areas the company might want to exploit. Even without the addition of more ramps, “It’s already a lengthy trip,” Rampton says. “It’s a grand total of about six kilometres from the bottom of the mine.”

What they might do, he says, is use existing ramps to bring in manpower and equipment, but put in a new 300-to 400-metre shaft and lift dedicated to ore extraction.

“It would save us a lot of money,” he says.

That’s something Rampton wants to do as much of as possible, so that if the mines go back into production, Kinbauri can run a more efficient operation than Rio Narcea did in its final years.

Before Lundin took it over, Rio Narcea closed up shop at El Valle and Carles due to increasing mining costs and a desire to offload marginal mines in its roster. Towards the end of its tenure, the cost of producing gold rose to more than US$400 per oz., up from less than US$300 per oz.

About a year ago, Rampton told the The Northern Miner that Kinbauri expects to produce gold at a cost of between US$300 and US$320 per oz.

“We can do better than (Rio Narcea) because they weren’t completely filling their mill,” Rampton says.

To finance the project, Kinbauri is looking at a variety of sources and will consider anything that minimizes dilution.

In the short-term, Rampton says the company has enough cash to get past February. “We feel we’ll be able to top up our kitty soon — without diluting too much.”