Mr. Gonzalo de Losada reports
ANTIOQUIA GOLD CISNEROS OPERATIONS UPDATED
Antioquia Gold Inc. has provided a production update on its Cisneros mining operation and has arranged an underground drilling program.
During the last three months of operation, the company maintained processing rates higher than 500 dry tonnes per day with a slight decrease in the feed grade. Currently, the company's production is mainly from the Nus shear zone, with limited contribution from narrow veins.
A summary of the monthly production from the beginning of the operation, highlighting the high recovery rates achieved in the process, is given in the accompanying table.
January February March April May
Mineral processed dry tonnes 1,656 9,666 11,891 15,027 16,028
Feed grade g/t Au 2.30 2.16 2.90 2.80 2.74
Gold produced oz 112 598 1,044 1,292 1,354
Total recovery % 91.7% 89.2% 94.2% 95.6% 96.0%
Average processed dry tonnes/day 151 345 384 501 517
June July August September October
Mineral processed dry tonnes 16,474 17,438 16,958 15,585 16,052
Feed grade g/t Au 2.54 2.88 2.33 2.02 2.03
Gold produced oz 1,246 1,524 1,223 958 993
Total recovery % 92.7% 94.3% 96.3% 94.5% 95%
Average processed dry tonnes/day 549 563 547 520 518
The company plans to start an underground drilling program before the end of the year with the aim of expanding the mineral resources to extend the mine life. A significant increase in mining rates is expected due to the coming expansion of the processing plant and the implementation of the ore sorting process (see news release dated Aug. 15, 2019).
The drilling program will be at least 10,300 metres and will be focused mainly on exploring the Nus shear zone and the Guayabito vein system along strike and at depth
Significant progress on the six strategic fronts that are in development (see Aug. 15, 2019, news release) includes:
- Plant expansion to 1,200 tonnes per day: While construction progress is on schedule, delivery of the second mill is delayed for four weeks, so the completion date has been redefined to February, 2020. Progress is also being made with the environmental impact assessment, which is expected to be delivered to the authorities before year-end.
- New mining contractor: The new mining contractor is mobilizing its equipment and contracting personnel to site with the objective of starting operations in December.
- Alternative mining pilot tests in narrow veins: Pilot mining tests in narrow veins continue with productivity, cost and quality (dilution) being investigated. The evaluation is expected before the end of the last quarter of 2019.
- Installation of the ore sorting process: The companies that will perform the mechanical assembly, construction and electrical instrumentation have been selected. The process should be operational before the end of the first quarter of 2020.
- Energy purchase contract signed: The contract with EPM (Empresas Publicas de Medellin) has been signed, and therefore a reduction of rates will be reflected in the month of November.
- Purchase of third party mineral feed: Due diligence studies are in progress with potential mineral suppliers. Some minor purchases have been made, with satisfactory results for the most part.
"With all these advances in the different strategic lines defined by the company, financial results have been improving, achieving positive EBITDA [earnings before interest, taxes, depreciation and amortization] in the last few months. These results are expected to improve further with the improvements and projects that are to come, and debt repayment is expected to start next year," said Gonzalo de Losada, president and chief executive officer of the company.
Readers should also be cautioned that the corporation's decision to move forward with the construction and production of the Cisneros mine is not based on the results of any prefeasibility study or feasibility study of mineral resources demonstrating economic or technical viability. Readers are referred to the Cisneros report for details on independently verified mineral resources on the Cisneros project. Since 2013, the corporation has undertaken exploration and development activities, and after taking into consideration various factors (including but not limited to: the exploration and development results to date, technical information developed internally, the availability of financing, and the low starting costs as estimated internally by the corporation's management), the corporation is of the view that the establishment of mineral reserves and the commissioning of a prefeasibility study or feasibility study at this stage are not necessary, and that the most responsible utilization of the corporation's resources is to proceed with the development and construction of the mine. Readers are cautioned that due to the lack of prefeasibility study or feasibility study, there is increased uncertainty and higher risk of economic and technical failure associated with the corporation's decision. In particular, there is additional risk that mineral grades will be lower than expected, as well as the risk that construction or continuing mining operations will be more difficult or more expensive than management expected. Production and economic variables may vary considerably, due to the absence of a detailed economic and technical analysis in accordance with National Instrument 43-101. Project failure may materially adversely impact the corporation's future profitability, its ability to repay existing loans and its overall ability to continue as a going concern.
Roger Moss, PhD, PGeo, consultant to Antioquia Gold, is the qualified person as defined by NI 43-101 and has reviewed and approved the technical information provided in this news release.
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