Palito Gold Mine

The Palito Mine is a high grade, narrow vein underground mine which was operated by the Company from late 2003 until the end of 2008 when the underground mining operation was placed on care and maintenance. The Company published in June 2012 a positive Preliminary Economic Assessment indicating that a small high-grade selective mining operation producing circa 24,000 ounces per annum could, at a gold price of $1,400 per ounce, generate approximately US$11 million of annual post tax cash flow over an 8 year period. Average mined grades over the current project life were estimated at 8.98 g/t with the operation processing about 90,000 tonnes of ore per year.  

The Company, in the fourth quarter of 2012, having secured the required financing commenced a programme of mine development and plant refurbishment.  Commissioning of the process plant began in December 2013 and, following a six month commissioning and ramp-up period, the Company declared that the Palito Mine achieved commercial production effective as of 1 July 2014.  In the first year of operation gold production from Palito totalled 18,452 ounces, which increased to 29,841 ounces in 2015.

Following suspension of the mining operations in 2009, the Company sought to keep intact as much of the infrastructure at the Palito Mine as possible which minimised the capital requirements for the re-start of operations. The gold process plant for treating Palito ore comprises, crushing and milling  followed by an initial flotation process from which a copper/gold concentrate is produced with the tailings being passed through a standard CIP gold recovery plant.  The gold plant also incorporates a gravity circuit and in-line leach reactor for the processing of ore from the satellite Sao Chico Mine.  The daily plant throughput is currently anticipated to be between 400 and 450 tonnes per day.  The site is supplied with mains power sourced from a 25 Mw hydroelectric generating station located approximately 100 km north east of the town of Novo Progress on the Curua River but the Company also has generators capable of providing all the power requirements for the site which also incorporates accommodation for all employees and maintenance and workshop facilities.

The Company had been pursuing a strategy of resource growth before making any decision on when to recommence production at the Palito Mine. Its exploration objective was to identify two or more Palito style and size deposits in close proximity to the Palito Mine itself and its existing camp and processing infrastructure. During 2011, the Company undertook discovery drill programmes over nine targets all within three kilometres of the Palito Mine, each of which it considered, based on its exploration results to date, had the potential to yield a Palito style and size deposit. Three discoveries, Palito South, Currutela and Piaui were made.  The strategy was, and remains, to use cash flow from operations to fund the further evaluation of the three discoveries, advancing them through resource definition and in time developing them into new mining operations.

When the mine had previously been in operation between 2003 and 2008, a total of 480,000 tonnes of ore was processed through the plant at an average gold head grade of 6.76 g/t. Average plant recovery during the period was 90% and total production was 110,097 gold equivalent ounces.