UPDATE: Patagonia Gold chairman ups stake after progress update

Carlos Miguens, chairman of Patagonia Gold(LON:PGD), has made a big show of faith in the company after its progress update on Tuesday morning.

Miguens spent £910,000 buying 7mln Patagonia shares at 13p a pop, taking his share stake up to just over 125mln shares, equivalent to 14.62% of the company.

Patagonia Gold revealed on Tuesday morning that its Lomada de Leiva project remains on track to start producing cash for the company in the second half of the year.

Lomada is one of Patagonia’s four projects in Argentina that also includes the flagship Cap-Oeste project, the nearby COSE project, and the La Manchuria project.

At Lomada, preparation works for the 200,000 tonne expansion of the existing trial heap leach pad have finished, construction of the first stage of the main heap leach pad is on schedule, while lining of the drainage dam and buttress sections is now in place with pipework installation underway.

The mining fleet has also been delivered to site and commissioned, with all contractor equipment to be off site by the end of this month.

Bill Humphries, Patagonia’s chief executive, said: "With the Lomada project funded to completion and set to provide free cash flow in the second half of 2013, Patagonia Gold can now focus on expanding its significant resource base of 1.88 million ounces of gold equivalent, concentrating on the highly prospective, high grade Cap-Oeste/COSE and La Manchuria deposits."

At Cap-Oeste/COSE, drilling in the structural corridor between the two deposits has intersected wide zones of gold-silver mineralisation with drill-hole CSE-091 intersecting 66.6m at 2.04 grams per tonne (g/t) gold and 36.18 g/t silver.

An update to the COSE resource to include the newly identified mineralisation is scheduled for completion in the final quarter of 2013.

A pre-feasibility study at Cap-Oeste is set to commence in May 2013 led by Newfields Reno, Nevada US.

At La Manchuria, drilling has recommenced with 4,000 metres of extension and exploration drilling scheduled for completion in this quarter.

The Manchuria deposit is currently being re-evaluated as a potential bulk tonnage heap leach target.