Quebrada del Diablo is a potential moneymaker

Vancouver — Viceroy Exploration (VYE-V) is encouraged by the findings of an independent preliminary economic assessment of the Quebrada del Diablo deposit, part of the Gualcamayo project in west-central Argentina.

The study projects an after-tax internal rate of return (IRR) of 32.3%, based on a gold price of US$400 per oz.

Plans call for a 10,000-tonne-per-day mine with a gold recovery rate of 80%. The mine would comprise a series of open pits, and ore passes, not haulage trucks, would be used. After crushing, the material would be conveyed 1.5 km to heap-leach pads in the valley below.

The main resource at Quebrada del Diablo includes 37.1 million tonnes grading 1.04 grams gold (1.2 million oz.), at a cutoff of 0.5 gram gold, in the measured and indicated category. There are also 11.3 million tonnes grading 1.2 grams gold, or 435,000 oz., in the inferred category.

The economic study projects annual production of 96,100 oz. gold over a lifespan of 10 years and at a cash cost of US$133 per oz. Capital costs are pegged at US$55.7 million before production and US$14.4 million annually thereafter.

Prestripping would remove the limestone cap on top of the main Quebrada deposit, allowing continuous access to the ore. With the prestripping, the waste-to-ore ratio is 2.25-to-1; without, the ratio changes to 1.63-to-1.

Construction of an on-site camp is envisioned for the the Argentinian workforce.

The IRR is 24.5% and 37.8%, at metal prices 10% below and above the US$400-per-oz. base case, respectively.

Recent exploration drilling returned two of the best intercepts to date. Hole 108 intersected 2.5 grams gold over 87.5 metres from surface, including 4.1 grams gold over 30.3 metres, and hole 109 cut 2.2 grams gold over 87 metres from surface, including 4.2 grams gold over 30.2 metres. The mineralized intervals occur in limestone, marble and intrusion-hosted breccia.

Meanwhile, Viceroy continues to explore another near-surface deposit, Amelia Ines, where measured and indicated resources are pegged at 2.1 million tonnes grading 2.82 grams gold, or 192,000 oz., at a cutoff grade of 0.5 gram gold.

The inferred resource for Amelia Ines, combined with the adjacent Magdalena deposit, stands at 2.9 million tonnes grading 1.88 grams gold, or 176,000 oz.