Rio Novo Gold marches towards production

Rio Novo Gold (RN-T) hopes to become a gold producer by bringing its two advanced-stage Brazilian properties into production: The Almas gold project in the southeastern part of Tocantins State, and the Guaranta gold project in the northern part of Mato Grosso State.

Almas is expected to be the first into production. Located in central-west Brazil near the town of Almas, the project includes one past-producing mine called Paiol, formerly operated by Vale (VALE-N), and a number of gold exploration targets, as well as the Arroz deposit.

Between 1996 and 2000, Vale churned out 86,000 oz. gold from the open-pit mine and heap-leach operation at Paiol before production was suspended due to low gold prices. Rio Novo believes that Vale left behind about 47,000 oz. gold on its leach pad alone.

Measured and indicated resources for both open pit and underground at Almas stand at 16.52 million tonnes grading 1.16 grams gold for contained gold of 614,311 ounces. Inferred resources add 3.87 million tonnes grading 1.64 grams gold for contained gold of 204,316 ounces.

The current resources, which are almost entirely measured and indicated, might support a mine life of about six to seven years, the company said in a press release on June 13.  

Mineralization at Paiol is lode-type quartz sulphide veins linked to strongly sheared metavolcanic rocks. 

Individual ore-bearing zones within the Paiol and Arroz deposits consist of lens-shaped ore shoots and anastomosing irregularly shaped bodies within the plane of the shear zone. Ore shoots occur in steeply plunging lenses.

In April, Rio Novo acquired an unused ball mill (at less than half the cost of a new one) with throughput capacity of 2 million tonnes per year (5,800 tonnes per day) and other processing equipment. In the same month, the
junior also signed an exploration and option agreement to acquire a 100% interest in five mineral rights near the project’s eastern border. The new area will add 30,766 hectares to the Almas project, taking the company’s total land package to 1,009 sq. km, an increase of 163% since the company’s initial public offering.

Rio Novo reported in early May that results from extension hole FX1D-0021 at its Guaranta project returned “significant” intervals, including 46.65 metres of 1.54 grams gold per tonne, 8 metres of 7.36 grams gold and 13 metres of 1.92 grams gold. The extension hole was about 40 metres west of previous drilling at its X1 deposit.

Highlights of continuously mineralized intervals within the same hole included 3.56 grams gold over 14.65 metres, 11.63 grams gold over 5 metres and 3.03 grams gold over 9.7 metres.

“We expect both X1 in-fill and western extension holes in the next two weeks that we hope will expand the resource of the deposit,” David Beatty, Rio Novo’s chief executive, wrote in an e-mail to The Northern Miner. “We continue an active two drilling rig program testing strong VTEM, IP and geochemical anomalies immediately adjacent to the existing deposit.”

The X1 deposit is 11 km south of the town of Guaranta do Norte, while the Guaranta deposit is 4 km north of town.

Measured and indicated resources for the X1 deposit, within an optimized pit shell at a gold-equivalent cutoff grade of 0.5 gram, total nearly 8 million tonnes averaging 1.35 grams gold and 4.6 grams silver, or 364,000 gold-equivalent oz. Inferred resources add 471,100 tonnes averaging 1.43 grams gold and 4.5 grams silver. 

Guaranta lies within the Alta Floresta gold province, a paleo-mezzo Proterozoic environment in the southern portion of the Amazon craton. The region hosts both porphyry-related and epithermal gold deposits associated with granitic and calc-alkaline intrusions, and lode gold deposits related to regional shear zones.

At presstime, Rio Novo Gold traded at $1.50 per share within a 52-week range of $1.10 and $2.82. The company has about 113.1 million shares outstanding.