Herencia Resources raises £4.7 mln for 2011 work programme at Paguanta gold-silver-copper-lead project

Herencia Resources (LON:HER) has raised £4.7 million via a share issue to advance its 70% owned Paguanta copper-silver-lead-gold project in Chile.
Specifically, the funds will be used to commence the feasibility study for the proposed Patricia mine, drill the Doris copper-silver prospect and the La Rosa porphyry-copper target and undertake infill-step out drilling of the Patricia mineral resource.
“The support shown for our plans for the Paguanta project, from both existing and new shareholders, has been outstanding.
“We are now funded to undertake a comprehensive work program in 2011 which is scheduled to include drill programs on all three project areas and commencement of the feasibility study,” said managing director of Herencia Resources Michael Bohm.
A total of 270.7 million shares were issued by Herencia at a price of 1.75 pence per share.
Herencia Resources has recently announced that the Paguanta project was worth US$90.4 million after an update of the project's economic model. In October it upgraded the mining inventory.
The recent upgrade increased the inventory by around a third to 1.66 million tonnes. Consequently Herencia now gives Paguanta a net present value of US$90.4 million.
The latest economic assessment also highlighted the project’s potential to increase its value. Herencia reported to 'sensitivity' cases that estimated Paguanta’s value in the future.
The ‘Post-Feasibility’ case assumed that a further 740,000 tonnes are added to the mining inventory in 2011, in this scenario Herencia believes Paguanta could be worth US$139.5 million.
Meanwhile, the ‘Upside Case’ assumes that Herencia can double the current 1.66 million inventory, which would give Paguanta an estimated value of US$184.9 million.
A week ago, Herencia hired a contractor to carry out geophysical work on the Doris prospect.
The work programme is expected to start in the first week of January, and it should be completed by the end of the month.