What the Analysts Say
WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.
Website: www.breakawayresearch.com
Company: Orinoco Gold Limited (ASX: OGX)
Orinoco has commenced development of its 70 per cent held, fully permitted Cascavel gold project in Goiás State, central Brazil.
Funding has been sourced through an innovative gold sharing financing package, which maintains fair returns to the company and shareholders.
A JORC-compliant resource has not been estimated due to high nugget effect of the gold mineralisation and insufficient drill data due to prohibitive cost of a drill out.
However, bulk sampling and previous underground mining at Cascavel indicate a diluted gold grade in the order of 20 grams per tonne should be achievable, and the drilling to date indicates there will be sufficient mineralisation to more than meet the requirements of the initial mining plan.
The above factors, combined with an initial four year, 40,000 tonnes per annum mining operation utilising simple gravity treatment and low operating and capital costs, should provide good returns and the foundations of a robust operation.
There is excellent scope to increase the scale of production beyond the initial mining plan based on the excellent exploration potential of the region.
Cascavel is located in a broader tenement package that has returned excellent exploration results for both further orogenic gold mineralisation and broad scale IOCG mineralisation.
Website: www.bellpotter.com.au
Company: Highfield Resources Ltd (ASX: HFR)
Muga potash project DFS improves on previous studies
Highfield has released a definitive feasibility study for its Muga potash project in Spain.
The DFS metrics mostly improve on the prefeasibility study estimates.
The project is now expected to produce at steady state of 1.1 million tonnes per annum K60 product, at C3 operating costs of US$135 per tonne for a mine life of 24 years.
Total capex is estimated at US$354 million with first production in mid-2017 and full production from 2019.
Highfield estimates the project’s NPV has increased to US$1.42 billion (previously US$1.06 billion).
Permitting, financing next, development from October 2015
Through to mid-2015, we expect Highfield to receive government approvals for the Muga project.
Highfield is already in discussions with several banks regarding debt and project financing facilities, and with potential partners regarding product offtake.
We expect financing to be completed by Q4 2015 and construction to commence thereafter.
In April 2015, Highfield also aim to release a resource and scoping study for its second potash project, Sierra del Perdón.
Highfield provides unique leverage to an agricultural linked commodity with a solid demand outlook.
The company’s key project is located in a former potash producing basin in Spain, and is expected to use conventional mining and processing technologies.
Highfield controls 100 per cent of the project and its offtake, adding flexibility around financing.
Highfield has full control of a former potash producing basin with potential strategic value.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.
The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.
The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.