Antioquia eyes Colombia cash flow

A couple of hours’ north-east of Medellin, Antioquia Gold (TSXV: AGD) has quietly worked away at its Cisneros gold project in Antioquia, Colombia, and is building an underground mine that aims to produce 30,000-40,000 ounces a year of gold from late 2017.


While the company fell off most people’s radar in recent years, it is proof that patience and dedication can produce results in gold-rich Colombia and the timing for its approaching production could not be more serendipitous, coming as Colombia is receiving increased investor interest due to the success of other companies and projects.

Antioquia is driving a 4.5m-by-4m ramp into its Guaico orebody, comprised of high-grade narrow veins, having taken the decision to commence mining despite having a modest resource of 270,000 ounces at 5g/t gold and having not undertaken an independent preliminary economic assessment, prefeasibility study or feasibility study. This gap was filled by the financial, technical and management backing from Peru’s Infinita Minera Prosperidad group, specialists in underground precious metals mining in Peru.

“We made a corporate decision that 270,000oz was sufficient to get a mine of this size started, because to double that resource would have required spending another US$3–5 million on exploration and it probably would have taken another two years to get to that,” says VP of investor relations, Jim Decker.

The nature of narrow high-grade vein deposits means that it is difficult to model the zones where structures cross and bonanza grades occur and the tight drill spacing required to obtain the higher resource categories for such deposits and therefore the associated drilling costs, led company management to believe that they were better off investing in mine development rather than drilling holes.

Antioquia expects that when mining starts in earnest it could achieve better than planned production results when it encounters such bonanza zones than its resource model allows it to give guidance on. Notwithstanding this, the company is looking to undertake infill drilling on the southern part of Guayabito—with some 450m in five holes planned where 2016 drilling extended the structure by 200m. “This will add ounces. The aim is to get our measured and indicated re-sources to about 200,000 to give the market comfort that we can produce for many years,” says Decker.

Cisneros hosts 599,000 tonnes at 5.05 /t gold in measured and indicated resources for 97,100 contained ounces, and 1.1 million tonnes at 4.9g/t gold in inferred resources for 173,000 contained ounces. The company expects to update this resource in 2017.

The current resource is also relatively shallow as Antioquia plans to drill additional holes from deep underground to find mineralisation that would be exploited in later years in the mine life. “We have been waiting until the underground development is in place to be able to drill from the drifts and we are ready to start this in the near future,” Decker says.

In addition to the advanced mine development at Guaico, work has just begun on a parallel program at Guayabito for a portal and mine access via a ramp/tunnel system. In addition, civil works are well underway for the plant and infrastructure at Guayabito. Topsoil has been removed and stockpiled; access roads are in place; the permanent camp is partially complete; 90% of the plant equipment has been ordered with the crushing, screening and milling equipment already on site or in transit.

Cisneros is already showing healthy signs of exploration upside. Guaico may be the first orebody but the current resource estimate does not include mineral from four new structures intersected by the tunnel/ramp development. “These are 1.5m wide or more and run from 11g/t to 300g/t gold, and they are open along strike and at depth,” says Decker.

An exploration tunnel is being driven into the La Manuela vein, which is not in the mine plan, but that has good potential due to the artisanal miners that used to work it from surface, and from whose workings the company took a sample of 27g/t of gold. With artisanal workings scattered throughout the Cisneros property the 270,000oz gold resource could just be the tip of the iceberg particularly given that other parts of the concession package with similar geochemical and geophysical signatures to the Guaico-Guayabito areas. “There could be at least one million ounces of exploration potential. In the next two to five years we should hit the targets that have the potential to increase our production to 60,000ozpa and more,” he says.

Mine plan
Antioquia plans to produce 30,000-40,000ozpa of gold for six or seven years from January 2018 with ore extraction from Guaico to commence in the third quarter 2017 at 250 tonnes per day that will be added to in 1Q 2018 by another 250tpd from the Guayabito deposit. Ore with a 7g/t gold head grade will all be fed into a 500tpd plant.

Infinita’s wealth of experience mining under¬ground vein systems has enabled the company to advance some 300m a month with its underground development, which includes putting in the infrastructure to have lower-cost access to the Nus and La Manuela structures that are not yet included in the current resource.

The mine will use conventional on-highway trucks rather than mining trucks for ore haulage. “Conventional trucks are significantly cheaper to operate and can be readily available from contractors,” says Decker.

In terms of metallurgy, the gold is associated with pyrite and can be freely liberated by milling with 50-60% recoverable with gravity while flotation recovers another 45%, with overall recovery anticipated to be more than 95%. Although it would have meant slightly higher gold recovery, the company decided against including a cyanidation circuit as part of its initial mine build due to the concern that the ‘C-word’ raises in local communities. “I think we got our permits more quickly because we are not using cyanide,” he says.

As a result, the company will produce a gravity concentrate and a flotation concentrate. “Infinita has a lot of experience selling these concentrates and we expect to receive top prices for our products,” he says.

The mine site, plant and TSF will occupy a relatively small footprint, less than 100 hectares in total, and the company has also acquired 130 hectares of land that it will restore and revegetate as part of the compensation requirement of its environmental licence.

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