Mundo announces go-ahead for South American gold mine
Mundo Minerals has taken a major step towards realising its vision of becoming a significant new mid-tier Australian-based gold producer after yesterday securing simultaneous Board approval for the development of its Engenho Gold Project in Brazil and the acquisition of the advanced Torrecillas Gold Project in Peru.The Perth-based company plans to fast track the development of Engenho towards first production by late March/early April in 2008, slightly ahead of its original schedule, after completing a Feasibility Study that confirmed both the economic and technical viability of the project.Mundo Minerals’ Chief Executive Officer, John Langford said initial site works at Engenho would commence in late April with construction of the treatment facility scheduled to start in July, followed by mine development in October 2007.“We have lodged all the final environmental, mining and treatment approvals with the authorities in Brazil, and we are confident of securing these by early July,” Mr Langford said. “With written approvals already in hand to commence construction and operation of our Engenho crushing circuit, we have scheduled commissioning of this component of the plant to commence in August this year.”The Engenho development will be based on an underground mine delivering 195,000tpa of ore to a conventional CIP treatment plant, with annual gold production forecast at approximately 30,000 ounces – or 275,000 ounces in total over an estimated 10-year mine life.Mr Langford said the completion of the Engenho Feasibility Study provided a strong base case valuation for the company’s net asset backing, excluding any value, which might be ascribed to its exploration assets.“We are well placed to move ahead rapidly with development of this asset, with financing options well advanced,” he said. “These alternatives will be considered over the next two months, with a view to finalising a suitable funding package by mid-year.”In addition to advancing pre-development activity at Engenho, Mundo will also exercise its option to purchase the Torrecillas Gold Project from private interests in Peru for US$2m, payable in stages. Mundo will appoint a Country Manager to oversee its emerging operations in Peru, including an exploration, feasibility and development work aimed at bringing Torrecillas into production within 18 to 24 months. “Torrecillas has been a high-grade producer for small, private operators over many years and the surface drilling and underground channel sampling work completed over the past four months has delivered us the confidence we need to go forward with this project,” Mr Langford said.“We have confirmed the continuity of six high-grade veins over a strike length approximately two kilometres long and will now embark on a broader exploration and feasibility program focusing on the significant commercial potential of the extensive high-grade vein system. “Our assessment indicates that Torrecillas has the potential to support a commercial mining operation that could deliver a robust financial return to Mundo,” he said.The Torrecillas acquisition also represents an opportunity for Mundo to gain a strategic foothold in a regionally significant mining region in southeast Peru that has the potential to yield a number of additional production assets. A number of underground mines are currently operating in the region on narrow vein, high-grade gold deposits analogous to Torrecillas.