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or Name
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Condor Gold PLC
Symbol COG
Shares Issued 94,663,522
Close 2020-03-03 C$ 0.48
Market Cap C$ 45,438,491
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Condor considers open-pit scenario for La India

2020-03-04 06:10 ET - News Release

Mr. Mark Child reports

HIGH GRADE OPEN PIT MINING SCENARIO, LA INDIA PROJECT, NICARAGUA

Condor Gold PLC plans a high-grade open-pit mining scenario for the La India project, Nicaragua, which has been developed as part of continuing mining dilution studies being undertaken by SRK Consulting (U.K.) Ltd. The high-grade open-pit scenario is one of three main scenarios being considered by the company. The principal option is to proceed with the construction and development of the main, permitted La India open pit with a target of 80,000 ounces gold to 100,000 ounces gold per annum. The second option is to add the high-grade feeder pits of Mestiza and America, which are currently being permitted, to the La India open pit, which would increase production to approximately 120,000 ounces gold per annum for seven years (see news releases dated March 5, 2019, and Nov. 22, 2019).

Highlights:

  • High-grade open-pit mining scenario delivers a robust diluted tonnage of 1,637,000 tonnes at 4.65 grams per tonne gold for diluted head grade of 245,000 ounces gold derived from the previously reported indicated and inferred mineral resources;
  • Supports high-grade option of smaller 1,000-tonne-per-day plant for five years;
  • Stockpiling may improve initial head grades;
  • Allows Condor to consider a lower initial capex start-up scenario;
  • Demonstrates significant open-pit mill feed for a toll milling scenario.

Mark Child, chairman and chief executive officer, commented: "Condor is running a number of mining scenarios ahead of a construction decision, one of which is based on the construction of a smaller plant, which minimizes capex and maximizes cash flow in the earlier years of production. I am delighted with the preliminary results of the mining dilution studies by SRK on the America and Mestiza satellite feeder pits, which demonstrate that with a selective mining approach the feeder pits could contribute a diluted tonnage of 1,249,000 tonnes for a diluted head grade of 4.76 g/t gold containing 191,000 ounces to the mine plan. When these feeder pits are added to the high-grade material within a series of mini-pits containing 387,000 tonnes at 4.29 grams per tonne gold for 53,300 ounces gold within the permitted La India open pit, the total diluted mill feed is 1,637,000 tonnes at a 4.65 g/t gold diluted head grade containing 245,000 ounces gold. This would support a 1,000 tpd production feed to either a small plant constructed by Condor or a toll milling agreement with nearby processing plants for approximately five years, while leaving the bulk of the La India open pit intact, along with the potential for underground production for a long-range development potential."

Background

On Jan. 25, 2019, SRK completed an updated mineral resource estimate (see news release dated Jan. 28, 2019, for further details of the MRE) on Condor's 100-per-cent-owned La India project in Nicaragua, comprising 9.85 million tonnes at 3.6 g/t gold for 1.14 million ounces gold in the indicated category and 8.48 million tonnes at 4.3 g/t gold for 1,179,000 ounces gold in the inferred category. The MRE led the company to recognize the potential for a readily available high-grade open-pit resource at the Mestiza and America deposits adjacent to the already permitted La India open pit. Condor then commenced the environmental and social impact assessment (ESIA) study required to apply for mining permits for the development and extraction of ore from the satellite pits. Condor submitted the ESIAs to Nicaragua's Ministry of Environment and Natural Resources on Nov. 21, 2019 (see news release dated Nov. 22, 2019, for further details).

The MRE on the Mestiza satellite deposit also reported potential material exploitable by open-pit mining methods of 92,000 tonnes at a grade of 12.1 g/t gold for 36,000 ounces contained gold in the indicated category and 341,000 t at a grade of 7.7 g/t gold for 85,000 ounces contained gold in the inferred category. The MRE on the America deposit also reported potential material exploitable by open-pit mining methods of 114,000 t at a grade of 8.1 g/t gold for 30,000 ounces gold in the indicated category and 677,000 t at 3.1 g/t gold for 67,000 ounces gold in the inferred category.

It should be noted that these mining scenarios are part of continuing work being done by Condor to optimize the project, which has not yet been finalized, and so do not replace the 2019 MRE or the technical report entitled "Technical Report on the La India Gold Project, Nicaragua, December, 2014," dated Nov. 13, 2017, with an effective date of Dec. 21, 2014, both of which remain current.

Mining dilution studies

Recognizing the narrow-vein but high-grade nature of the satellite pits, Condor felt that conventional methods (such as block regularization) would not reflect the mining dilution and recovery that would be encountered at the satellite pits based on benchmarked operations in Nicaragua. SRK was therefore engaged to analyze variations on a dilution skin and selective mining approach, applicable when a vein is well behaved and visually distinct from the surrounding gangue (or barren) rock.

SRK considered several dilution scenarios to reflect the level of selectivity that may be applicable. A skin of waste around the vein was added to the mineralized zone along with a minimum mining width in order to reflect the mining selectivity of the expected mining equipment (typically small two-to-three-cubic-metre backhoes) loading 25- to 30-tonne haul trucks employed by the local contract mining companies. This equipment routinely achieves 40 centimetres selectivity on vein structures, which was then coupled with a minimum mining width of 1.5 metres and a base case cut-off grade of 0.75 g/t, which formed the basis of the SRK results.

The recommended case for the Mestiza deposit considered a cut-off grade of 0.75 g/t gold. The diluted and modified mining model reported a total diluted tonnage of 600,000 t at 5.76 g/t gold for 111,100 ounces gold within the $1,500 (U.S.)/troy ounce optimized pit shell used in the 2019 MRE update.

The recommended case for the America deposit considered a cut-off grade of 1.5 g/t gold. The diluted and modified mining model reported a total diluted tonnage of 649,000 t at 3.8 g/t gold for 80,000 ounces gold within the $1,500 (U.S.)/troy ounce optimized pit shell used in the 2019 MRE update.

Condor has completed internal studies on readily accessible high grade within the permitted La India open pit, which hosts an economic mineral reserve of 6.9 million tonnes at 3.0 g/t gold for 675,000 ounces gold. The mini-pits within the La India open pit contain diluted tonnage of 387,000 t at 4.29 g/t gold for 53,300 ounces gold.

The results of the above high-grade scenario are shown in the associated table. The tonnages, grades and contained gold estimates included in this are based on the mining of the existing and previously reported indicated and inferred mineral resources, which have been factored to include mining losses and dilution.

                    DILUTED TONNAGE AND GRADE SCENARIO           
         
                                        Thousands of      G/t      Thousands of
                                   dry metric tonnes                troy ounces

Mestiza open pit*                                600     5.76               111
America open pit**                               649     3.83                80
Mini pits with La India open pit                 387     4.29                53
Total                                          1,637     4.65               245

* 0.75 g/t Au cut-off grade applied within the Mesiza MRE $1,500 (U.S.)/troy
ounce.
** 1.5 g/t Au cut-off grade applied within the America MRE $1,500 (U.S.)/troy
ounce pit shell.
*** 0.75 g/t Au cut-off grade applied within La India mini-pits within pit 3 
(83,000 t at 4.03 g/t and 10,800 ounces) and pit 4 (41,000 t at 3.33 g/t and 
4,400 ounces). Pit 7 applies a cut-off of 3.0 g/t (263,000 t at 4.52 g/t and 
38,200 ounces).

Condor notes that the material potentially recoverable via an open-pit mining method for the satellite deposits combined with high-grading the La India open pit demonstrate that the company could sustain a 1,000 tpd production feed to either a small plant constructed by Condor or a toll milling agreement for approximately five years, while leaving the bulk of the La India open pit intact, along with the potential for underground production for a long-range development potential.

Looking forward, Condor intends to complete the continuing mining dilution studies and pit optimization studies, which are under way, and incorporate the results of those studies in a mine production schedule.

About Condor Gold PLC

Condor Gold was admitted to Alternative Investment Market in May, 2006, and dual listed on the Toronto Stock Exchange in January, 2018. The company is a gold exploration and development company with a focus on Nicaragua.

In August, 2018, the company announced that the Ministry of the Environment in Nicaragua had granted the company the environmental permit (EP) for the development, construction and operation of a processing plant with capacity to process up to 2,800 tonnes per day at its wholly owned La India gold project. The EP is considered to be the master permit for mining operations in Nicaragua.

Qualified persons

The mineral resource estimate has been completed by Ben Parsons, a principal consultant (resource geology) with SRK Consulting (U.S.) Inc., who is a member of the Australian Institute of Mining and Metallurgy, MAusIMM (CP). Mr. Parsons has about 18 years experience in the exploration, definition and mining of precious and base metal mineral resources. Mr. Parsons is a full-time employee of SRK Consulting (U.S.) Inc., an independent consultancy, and has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration, and to the type of activity that he is undertaking to qualify as a qualified person as defined under National Instrument 43-101 -- Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and as required by the June, 2009, edition of the AIM (Alternative Investment Market) Note for Mining and Oil and Gas Companies. Mr. Parsons consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears and confirms that this information is accurate and not false or misleading.

The mining dilution studies reported for the Mestiza and America deposits have been performed under the supervision of Dr. Tim Lucks, principal consultant (geology and project management), of SRK Consulting (U.K.) Ltd., who is a member of the Australian Institute of Mining and Metallurgy, MAusIMM (CP). Dr. Lucks is an independent qualified person as such term is defined in National Instrument 43-101. Dr. Lucks consents to the inclusion in the announcement that material that relates to the America and Mestiza dilution studies, in the form and context in which it appears and confirms that this information is accurate and not false or misleading

The technical and scientific information in this press release has been reviewed, verified and approved by Gerald D. Crawford, PE, who is a qualified person as defined by NI 43-101 and is the chief technical officer of Condor Gold.

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