Wednesday 7th December 2016

Resource Clips


Straight to Phase II

Metallurgy moves Equitas Resources closer than expected to Brazilian gold expansion

by Greg Klein

It’s a case of disappointing results being trumped by findings much more positive. Equitas Resources TSXV:EQT planned to add a gravity plant to its Cajueiro gold project in central Brazil, hoping to increase the modest operation’s recovery. Another stage in the project’s incremental development was to follow—a carbon-in-leach plant for further improvement. But, the company announced August 18, metallurgical tests gave gravity a failing grade. Those studies did, however, find conventional CIL results even better than anticipated. That now puts Cajueiro on the fast track as Equitas skips Phase I, advancing straight to CIL.

Equitas gained the 39,053-hectare property with last spring’s acquisition of Alta Floresta Gold and its 184,410-hectare Brazilian portfolio. Impressed by both the assets and Alta Floresta’s Brazil-based team, Equitas planned a step-by-step process of improving and expanding the flagship operation.

Metallurgy moves Equitas Resources closer than expected to Brazilian gold expansion

Metallurgical progress follows last spring’s drilling,
which focused on two zones of near-surface mineralization.

Currently limited to potential alluvial production of about a kilogram of gold per month, Cajueiro had languished at about 30% to 35% recovery through a sluice box. The company hoped to increase that to about 50% by adding a gravity plant, prior to a Phase II CIL plant and its hoped-for 85%. Metallurgical studies disappointed gravity expectations with a maximum of 22.1%. But surpassing expectations was conventional CIL, with a range of 93.7% to 96.2%.

Work was conducted by Testwork Desenvolvimento de Processo, whose technical director Walter de Moura boasts 30 years’ experience with AngloGold Ashanti NYSE:AU. Bench-scale tests on a 118-kilogram composite saprolite sample point to high recovery with limited grinding, rapid leach times and low reagent consumption, “a direct cyanidation approach to gold recovery,” Equitas stated.

That pushes Cajueiro directly to Phase II. Earlier this week Equitas pronounced itself “very close” to closing an amended $6-million financing. With all figures in U.S. currency, the deal with private equity firm Cartesian Royalty Holdings would bring $5 million in revolving loans and a $1-million warrant exercise.

Equitas would borrow instalments of the $5 million, repaying each $1-million drawdown with 2,100 gold ounces within a year or 2,300 ounces up to three years. Repayments made within one year could be re-drawn, giving the company a revolving loan capacity of $5 million.

Late last month Equitas closed an over-subscribed private placement totalling C$861,000.

Testwork now has analysis and design underway for a CIL test plant with a capacity of 250 to 400 tonnes per day. Permit applications have been filed to mine 50,000 tonnes per year from each of Cajueiro’s Baldo and Crente zones. The CIL plant would be located about halfway between the two zones, which sit less than two kilometres apart.

With construction expected to begin in Q4, the plant should take six months to build, communications manager Sean Kingsley tells ResourceClips.com. “During that time we expect further exploration and drilling.”

Baldo was the focus of last spring’s campaign of 20 holes for 1,600 metres, along with 700 metres of trenching. Most of the drilling consisted of infill holes targeting mineralized saprolite oxide, highly weathered near-surface material potentially amenable to open pit extraction.

“We expect to have those results very soon,” says Kingsley. “We also drilled the Crente zone, which shows a lot of upside. We drilled below a very shallow former garimpeiro pit and we’re looking forward to those results too.”

Highlights from initial assays reported last month included 24.26 grams per tonne gold over two metres, 18.86 g/t over another two metres and 1.4 g/t over 12 metres (not true widths).

There are other zones on Cajueiro that we haven’t talked about, that have even more prospectivity.—Sean Kingsley, communications manager for Equitas Resources

“There are other zones on Cajueiro that we haven’t talked about, that have even more prospectivity,” maintains Kingsley. “To get our full mining licence we had to do a lot of work on one-fifth of the Baldo zone, a pre-worked area which isn’t the most prospective area.”

A 43-101 report filed in April recalculated 2013 data for four zones of sulphides and of saprolite oxides. Using a 0.25 g/t cutoff, the project’s sulphides now total:

  • indicated: 8.64 million tonnes averaging 0.771 g/t for 214,100 ounces gold

  • inferred: 9.53 million tonnes averaging 0.664 g/t for 203,500 ounces

Using the same cutoff, four zones of oxides total:

  • inferred: 1.37 million tonnes averaging 1.775 g/t for 78,400 ounces

Baldo’s share of the saprolite oxides comes to:

  • inferred: 309,000 tonnes averaging 3.029 g/t for 30,100 ounces

It’s Cajueiro’s near-surface, higher-grade, more metallurgically attractive oxides that remain the focus of exploration and potential extraction.

Kingsley points to a highly experienced team that includes director Kyler Hardy, president/CEO Chris Harris, director David Hodge and VP of exploration Everett Makela, along with long-time Brazil veterans director Alan Carter, director/adviser Michael Bennett, adviser Jon Coates, mining manager Richard Crew and project manager Elvis Alves. “Individually, they’re all people with impressive accomplishments,” says Kingsley. “Collectively, they’re one hell of a team.”

He emphasizes that the project will make Equitas “a growth story. Now’s the time to boost Cajueiro’s production, get cash flow and grow from there.”


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