The investment matrix for the Cerro del Gallo silver project has been improved with the results of metallurgical testing of the ore. The results from processing ore through high pressure grinding rolls (HPGR) have generated a significant improvement in silver recovery. The following table shows the extent of the improvement in silver recovery rates.
The company has determined by crushing the ore to a finer gran size prior to heap leaching has generated a significant improvement in the recovery of silver. The table shows the recovery of silver from weathered ore improved to 59% and importantly the recovery rate from oxidised ore improvement to a 69%.
The recovery rates used in the bankable feasibility study (BFS) now being completed for Cerro del Gallo have increased significantly, as a result of the HPGR results the BFS will include higher metal production figures.
The production of silver will improve by 3,298 ounces with a minor improvement in gold of 69 ounces. The company has used the delays in third party designing of the processing circuit, to continue testing the findings. These tests will improve the confidence in the recover rates which will further de-risk the project.
With better metal recoveries, the company is investigating improving the processing circuit which would include the potential increase in the open pit heap leach resource in the ground, larger heap leach pads and various other infrastructure requirements. The company is hoping the final processing circuit design and site assessment will be completed by mid this month. Costing of the final open pit design and processing circuit are the only outstanding inputs to the BFS.
The HPGR test ground 80% of the ore to a 4.4mm thickness compared to a 6.3mm thickness used in the definitive feasibility study.
The changes in the pit design and processing circuit will likely raise the development costs of the Cerro del Gallo project. However, incorporating the new metal recovery rate findings into the BFS will generate higher annual revenues and lower the unit cost of production. An improvement in the operating margin for the project will generate a much higher net present value and ultimately greater returns for shareholders.
Not only will the operating margins improve but the ability to leach ore with an improved recovery rate will enable the company to include a greater portion of the ore that it has in the ground as a resource. The following table shows the current resource and reserve estimate for Cello del Gallo (Au is the symbol; for gold and Ag-silver).
What gets us excited is the total resource currently stands at 35.4 million ounces of silver and a reserve of 15.3 million ounces. Already, Cerro del Gallo has a significant mine life with the potential with improved metal recoveries to extend that life out further.
With the investment matrix for Cerro del Gallo getting a boost, exploration at the company’s Namiquipa silver project is also demonstrating considerable potential.
CJO Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
