Orvana inks deal with Bolivia’s Comsur

A recent agreement with Bolivia’s largest mining company will provide Orvana Minerals (ORV-T) with US$18 million in cash and financing to place the Don Mario gold-silver-copper project into production.

The deal, though still subject to a due diligence review and the signing of a definitive agreement, paves the way for development of the project, in eastern Bolivia. Under its terms, Compania Minera del Sur (Comsur) will receive about 53 million Orvana shares in return for US$4 million, plus the following commitments:

– financing Orvana’s purchase (from Comsur) of a gold mill and equipment valued at US$8 million;

– lending Orvana US$6 million to buy mining equipment, and to develop the open pit and underground mining operations in the Lower Mineralized zone (LMZ) at Don Mario, and;

– providing a commitment to place the LMZ into production within 18 months of the closing of the transaction, with a mine and mill of not less than 600 tonnes per day.

Comsur operates six mines in Bolivia, where it produces zinc, lead, tin, gold and silver. The company also has operating assets in Argentina.

Orvana’s Don Mario project consists of two deposits: the Lower and Upper Mineralized zones. Based on a previous feasibility study, the LMZ host minable reserves of about 848,000 tonnes grading 15.55 grams gold per tonne. Of this total, 246,000 tonnes grading 10.19 grams are minable by open-pit methods. The remaining tonnes are minable by underground methods.

Based on Orvana’s in-house evaluation, the Upper Mineralized zone is reported to host an oxide resource of 2.4 million tonnes grading 1.66 grams gold, 51.9 grams silver and 1.94% copper. A transition sulphide resource contains 1.9 million tonnes grading 2.26 grams gold and 48.9 grams silver per tonne, plus 1.39% copper.