Cleveland and Orinoco strike Brazilian agreement

THE BOURSE WHISPERER: Cleveland Mining Company (ASX: CDG) has signed a Mining Heads of Agreement with fellow Brazil-focused gold company Orinoco Gold (ASX: OGX).

Under the arrangement, Cleveland will assist Orinoco in mining, extracting, processing and selling gold ore from Orinoco’s 70 per cent-owned Cascavel project, with the material to be transported and processed at Cleveland’s Premier gold mine.

The two projects are located 120 kilometres from each other in central Brazil.

 

Location of Orinoco’s Faina goldfields project (including Cascavel)
relative to the states gold mines, including Cleveland’s Premier gold
mine. Source: Company announcement

 

Cleveland’s 50 per cent-owned Premier mine is currently undergoing a staged ramp-up with the introduction of a cyanide circuit expected to boost gold recoveries and cash-flow.

“This is a great example of productive strategic cooperation between two ASX-listed gold companies operating in central Brazil, delivering what we believe to be genuine win-win outcomes for both sets of shareholders,” Cleveland Mining managing director David Mendelawitz said in his company’s announcement to the Australian Securities Exchange.

“This is consistent with our broader strategic vision for the Premier gold mine, which is to build on our growing production and cash flow base to capitalize on quality growth opportunities, whether these are organic, exploration-driven opportunities within our existing portfolio or, as in this case, quality external opportunities.”

Looking at the deal from Orinoco’s point of view means it will be able to move its Cascavel project into production much sooner than expected, without incurring the usual upfront costs involved with advancing the project towards production.

This will enable it to focus its resources on value-adding exploration activities within its Faina goldfields project, including the recently-acquired Sertão gold mine, where the company considers there to be potential to delineate JORC compliant resources in the short term.

“This agreement leverages directly off the success of our exploration decline, which has opened up the ore zones at Cascavel and given us invaluable information about the best way to efficiently extract the high-grade gold mineralisation,” Orinoco Gold managing director Mark Papendieck said in his company’s ASX announcement.

“Cleveland will bring its extensive operational and project management expertise, which it has built up over a long period in this region, to help us to accelerate the development of a larger scale operation at Cascavel based on the geological information obtained from the decline.

“Cleveland will fund and operate the open pit mine, enabling us to bring Cascavel into production much sooner than would otherwise have been possible, and without a dilutive capital raising or sell-down of project equity.

“We believe that this arrangement will have demonstrable positive outcomes for shareholders of both companies.”

Email:    info@clevelandmining.com.au
              info@orinocogold.com

Website: www.clevelandmining.com.au
               www.orinocogold.com