“This is a project that’s been around since 1992. It was pretty much in a litigation standstill from 2003 to 2009. Historically it’s had only about 40,000 metres of drilling on it. New management came in April 2009 and settled the litigation, and brought a substantial amount of capital and drilling back to the property. The expectation is to have a new resource model out at the end of May 2011. There are six drills active on the property in the midst of a 70,000-metre drill program.
“The deposit is a typical low-grade, heap leachable Peruvian oxide deposit, and the average grade has been typically around about 0.6 grams. If you look at some of the intersections we’re hitting now, 2.5 grams is five times the resource grade. In that context, it is high grade. These Peruvian heap leach projects are some of the most profitable mines in the world—like Barrick’s Lagunas Norte and Newmont’s Yanacocha.
“The expectation for 2011 is for a bankable feasibility study to come out, as well as continued resource drilling results throughout the year. The resource model is based on drilling up to December 2010—a 30,000-metre program. We’re going to do another 70,000 metres in 2011, so the expectation towards the end of the year will probably be a resource update on the back of a substantial amount of drilling.
“We’ve got a very experienced mine-building team on board. CEO Peter Tagliamonte’s built four mines. It’s not a very difficult technical project, and we’ve got the team placed to build it.
“2011 is really going to go a long toward understanding how big this project can be. The scoping study certainly showed that this was a mine at around $400 cash costs in a 100,000 ounce scenario. It’s going to be substantially bigger than that now based on the new resource and the continued drilling, so hopefully cash costs will be well below $400. Those are the type of first quartile costs that get built these days. So 2011 is going to be a big year.”
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