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Monday, 14 January 2013
Minera IRL under budget and ahead of schedule at Ollachea
Minera IRL (LON:MIRL, TSE:IRL) got a positive write-up from Jennings Capital following a site visit by the broker to Ollachea, the miner’s flagship gold project in Peru.
Analyst Kwong-Mun Achong Low, who has a ‘buy’ rating and C$1.75 target price, praised the work done on the production tunnel, which is 85% complete and currently under budget and ahead of schedule.
The final tunnel would be within 30 metres of the ore body and capable of supporting an estimated 3,000 tonnes per day throughput of the underground mine.
“We believe management has done an excellent job of preparing Ollachea for the next level of value realization while maintaining enviable community relations,” said Low.
“The production tunnel is near completion and has afforded Minera valuable information on ground conditions and the positive surprise that water would likely not be an issue for operations.
“Underground exploration is set to commence, which we are optimistic would provide the company with positive news flow and the opportunity to expand the resource from its current 9-year mining reserve life.”
Low said he saw no significant water inflow to the mine, contrary to initial concerns, while noting that management was recently recognized for operating in an environmentally conscientious manner after being presented an award by the Ministry and by local universities.
“We believe this is a significant award given the usual concerns of environment and community when operating in Peru,” he added.
The analyst expects the environmental impact assessment (EIA), which was submitted just before Christmas, to be approved six months down the line, at which point construction could begin, depending on Minera raising enough capital.