Monday, 31 December 2012

Things coming together nicely for Minera IRL, says chairman

Latin America-focused gold group Minera IRL (LON:MIRL TSE:IRL) achieved a lot in 2012, says executive chairman Courtney Chamberlain.
“Two feasibility studies, one project permitted, another project’s EIA ready to go, resource updates in both projects and a good year at Corihuarmi with a sniff of another year’s production at the mine,” means Minera ticked a lot of boxes, he told Proactive Investors.
Two of the key announcements came through at the tail-end of 2012 with a feasibility study at its flagship project at Ollachea in Peru and permission to go ahead with its Don Nicolas development in Argentina.
Chamberlain says the next big milestone is to finance the projects.
In Argentina [at Don Nicolas], “We are looking seriously at self-financing,” he told Proactive Investors, with any deal secured against the assets.
In Peru [at Ollachea], "We are seeing interest from banks and looking at a more traditional debt/equity arrangement."
On both projects, he said technically things look very good and in spite of some of the headlines concerning Argentina, the relationship with the authorities in Santa Cruz province is very good.
“There are not many places you can get a development permit in five months,” he said. 
Minera has also signed a 10-year co-operation agreement with local communities while the new mine is set to be a significant employer in the Patagonia region.
Don Nicolas is scheduled to start construction next year with a capital cost of US$56 mln and produce 55,000 ounces when up and running.
Chamberlain, though, sees a lot more upside in Argentina. 
As well as Don Nicolas, which is expected to start producing early in 2014, Minera has made a discovery at Escondido, which is also located on the Deseado Massif in Santa Cruz and adjoins Mariana Resources’ Las Calandrias deposit.
According to Chamberlain: “The Massif has huge upside potential.We have got 26,000 hectares and 100kms of veins we haven’t tested yet so we have lots of targets."
“It’s a good patch and it’s emerging all the time,” he adds.
At Ollachea, drilling underground will start next year to test the eastern strike and down dip potential.
The project was assigned a net present value of US$155mln post-tax at a gold price of  US$1,300 and upfront capex of US$178mln in the recent definitive feasibility study.
Chamberlain said Don Nicolas and Ollachea will be short payback, low operating cost projects, which will help both raise the funds for the next stages.
“Don Nicolas is a two year or less payback, which is attractive to financiers who like to get their money out.
"Ollachea is 3.5 years payback but for a long life mine that’s not too bad.”
Minera already has a producing mine at Corihuarmi in Peru. “It has produced 20,700 ounces this year and brings in good cash.”
The mine is winding down but Minera may be able to extend the life by another year, to 2016, says Chamberlain, which would be a very handy boost.
"If Corihuarmi can be extended until 2016, this will mesh very nicely with the opening of Don Nicolas in 2014 and potentially Ollachea in 2015.
Chamberlain is optimistic on the financing front despite the currency difficult background.
“The year has been good and things are coming together nicely” he concluded.

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