Amec E&C Services pegs total proven and probable reserves at just under 1.5 million tonnes running 8.7 grams gold, or 414,000 contained ounces gold, based on a cutoff grade of 3 grams gold per tonne and a gold price of US$330 per oz. Of this total, 318,000 tonnes grading 5.9 grams are classified as open-pit reserves; the remaining 1.1 million tonnes averaging 9.5 grams are listed as underground reserves.
Reserves in the LMZ were last estimated at 1.2 million tonnes averaging 10 grams gold per tonne.
Also, measured and indicated resources in the zone are placed at 1.2 million tonnes grading 11.3 grams gold, and 89,000 tonnes of inferred material grade 7.7 grams.
Gold mineralization in the steeply dipping, northwest-trending LMZ is associated with copper, bismuth, silver, lead, zinc, molybdenum and tungsten sulphide mineralization. The zone averages 6 metres in thickness and runs 700 metres along plunge (15-30 to the northwest).
Gold mineralization at Don Mario is found in two ore structures: the LMZ and the Upper Mineralized Zone (UMZ). Both lie within the larger, 700-metre-wide Don Mario Shear zone in the Cristal Schist belt.
Mineralization in the UMZ is characterized by gold, copper, silver, lead and zinc. Nearly the entire zone is oxidized. The host calc-silicate rocks are not found elsewhere on the property.
A previous in-house estimate of the metallurgically complex, near-surface zone totals 4 million tonnes grading 1.66 grams gold and 51.9 grams silver per tonne, plus 1.9% copper. A transitional sulphide resource contains 1.9 million tonnes averaging 2.3 grams gold and 48.9 grams silver, plus 1.4% copper.
Based on the updated LMZ reserves and a mining rate of 600 tonnes per day, the operation is expected to run for seven years (1.5 years longer than a previous estimate), and, at full steam, should produce 62,000 oz. gold per year. Operating costs are estimated at less than US$30 per tonne of ore processed.
Most of the ore will come from underground sources in the LMZ, and will be supplemented with ore from a small open pit. The operation is expected to hit its stride in 2004, with ramp-up slated for the second half of 2003.
The mining plan calls for ore to be mined via a shaft destined to reach a depth of about 345 metres. So far, the shaft has been extended 135 metres; the company also has a headframe in place.
Production at Don Mario began in late May, with the first dor bar poured in mid-July. Production in June and July totalled 2,499 oz. Gold recovery averaged 84.8% in July, mostly as a result of higher-than-expected copper content.
Since the beginning of July, the company has sold some 1,900 oz. of gold from the mine.
The total capital cost related to construction is now expected to be just under budget at US$19.9 million. Sustaining capital is expected to ring in around US$1 million annually.
The project is subject to a 3% net smelter return royalty payable to Repadre Capital, which recently merged with
During the second quarter of 2003, Orvana lost $266,176 (or nil per share), compared with year-earlier net income of $577,685 (1 a share). Still, the company managed to trim its operating loss by $92,797, to $173,688. Orvana says it will not record gold sales until the third quarter and thus did not report revenue in the second quarter.
For the first half of the year, the loss amounted to $294,922 (nil per share), compared year-earlier income of $534,097 (a penny a share); the operating loss fell by $102,836, to $202,434.
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