Amarillo's Posse Deposit Estimated at 643,000 Ounces Indicated, 538,000 Inferred; Preliminary Economic Assessment Shows Robust E
March 03 2008 - 6:30AM
Marketwired
VANCOUVER, BRITISH COLUMBIA ("Amarillo" or the "Company"),
reports that it is in receipt of its Preliminary Economic
Assessment ("PEA") on the Posse deposit at the Company's Mara Rosa
Project in the Goias State, Brazil, as prepared by Caracle Creek
International Consultants Inc. (CCIC). Results, estimates and
observations contained in the report are briefly discussed
here.
A revised resource estimate was prepared. Using a 0.5 g/t
cutoff, the estimate breaks down as follows:
Tonnes (mt) Grade (g/t) Ounces
---------------------------------------------------------------------------
Indicated 13.5 1.48 643,000
---------------------------------------------------------------------------
Inferred 13.0 1.26 538,000
---------------------------------------------------------------------------
@ 0.5 g/t cutoff
Using a 1.0 g/t cutoff results in the following estimate:
Tonnes (mt) Grade (g/t) Ounces
---------------------------------------------------------------------------
Indicated 9.1 1.83 536,000
---------------------------------------------------------------------------
Inferred 7.3 1.68 397,000
---------------------------------------------------------------------------
@ 1.0 g/t cutoff
This resource was calculated by means of the Ordinary Kriging
using samples drawn from 154 core holes, 25 of which were drilled
by Amarillo.
The deposit has a strike length of about 1.2km, dips to the
northwest at approximately 40-45degrees and varies in true width
from 15-30m. This estimate has included consideration of hanging
wall material that was not considered in a preliminary estimate
dated March, 2007. Re-categorization of the estimate is based on
further compilation and detailed study of historic data and a
revised estimation methodology.
The Posse deposit was mined by Western Mining (WMC) between 1992
and 1995. Mining was concentrated in two pits ("North" and "South")
where two higher grade chutes could be accessed. Approximately
388,000 tonnes were removed at a grade of 2.47g/t. Barrick, in a
due diligence report written in 1996, noted production recoveries
from CIL circuit of between 85% and 90% at observed millhead grades
of between 4.2g/t and 2.6g/t. The mine closed as a result of
depressed gold prices. All infrastructure, save for administrative
buildings, was dismantled and the area reclaimed. The required
remediation for mine closure were met and accepted by apposite
governmental authorities.
In addition to the revised resource estimate, CCIC has completed
a Preliminary Economic Assessment of the gold resources outlined in
the Posse deposit. A series of pit optimization studies were
performed to gauge the deposit's economic response to a variety of
input parameters. The primary baseline parameters were assumed as
follows: initial capital cost of $80m; mill recoveries of 80%;
maximum pit slopes of 60degrees; mining costs of $1.50/t; milling
costs of $7.50/t. Mill throughput was assumed at 2 million tonnes
per year (approximately 5500 tonnes per day.) Waste throughput was
allowed to fluctuate without constraint. It was felt that these
inputs reflected reasonable estimates at the time of writing given
the level of precision required by a PEA. Under these assumptions,
the following table provides the model's pre-tax cash flows
discounted at 0% and 5% at varying gold prices:
Ounces in respective
pit shell Strip ratio NPV-5% NPV-0%
---------------------------------------------------------------------------
@ $600/oz 697,000 3.82:1 $12.3m $25.3m
---------------------------------------------------------------------------
@ $900/oz 932,000 4.93:1 $153.6m $209.1m
---------------------------------------------------------------------------
@ $1200/oz 1,085,000 5.85:1 $312.9m $438.9m
An extensive sensitivity analysis was also undertaken. The
deposit appears most sensitive to, respectively, the gold price,
operating costs and mill recoveries. Results are detailed at length
in the NI43-101 Technical Report, now posted on Sedar.
CCIC observes that the deposit could be serviced by the local
power grid and a water supply could be secured from the local
utility. The town of Mara Rosa, with a population of about 11,000,
is located about 2km from the deposit and 11km from the
Brasilia-Belem Federal highway. A portion of any required labour
force could presumably be sourced here. The claims are currently
held under a mining lease, subject to periodic renewal. Several
mines have been permitted in the area and are now operational,
including Yamana's Chapada mine (about 35km to the south), and
Anglogold's Crixas mine (about 100km to the southwest).
The Company is encouraged by these results and expects to make a
decision regarding the commissioning of a pre-feasibility study in
the coming months. The Company remains well-financed with about $4m
in cash on hand as of February's month-end.
Iain Kelso, P. Geo., geologist with CCIC, is a Qualified Person
in accordance with NI 43-101 guidelines and has reviewed the
technical information presented in this news release. Mr. Kelso,
who is independent of Amarillo, is the author of the NI 43-101
compliant Technical Report on the Mineral Resource Estimate and PEA
for the Mara Rosa Project, dated February 29th, 2008.
Amarillo Gold Corp. is a company focused on the acquisition,
definition and discovery of gold resources in Brazil. Its principal
projects are Mara Rosa in the state of Goias and Lavras do Sul in
the state of Rio Grande do Sul. The Company also has a portfolio of
earlier stage projects. All properties under Amarillo's management
are located in areas of good infrastructure and robust community
support.
This news release contains Forward Looking Statements regarding
our intentions and plans. Various factors may prevent or delay our
plans, including but not limited to, contractor availability and
performance, weather, access, mineral prices and success and
failure of the exploration and development carried out at various
stages of the program. Readers should review risk factors
applicable to junior mining exploration companies generally to
understand the variety of risks that can affect the Company.
ON BEHALF OF THE BOARD OF DIRECTORS
AMARILLO GOLD CORP.
Buddy Doyle, President
TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Contacts: Amarillo Gold Corp. Buddy Doyle President (604)
689-1799 (604) 689-1899 (FAX) Website: www.amarillogold.com
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