MM: Can you tell us why it was important to undertake this metallurgical testing and what the results tell you with regard to project viability?
PH: One of the most important questions to ask with regard to a given gold deposit is whether the gold can be extracted from the rock economically, and the results of this testwork go a long way towards answering that question in the affirmative with regard to our Sierra de las Minas project area in Argentina. They aren’t a complete answer; more testwork on surface samples and material from deeper levels is required for that. However the results we have announced are a significant positive step, suggesting that if we can outline sufficient high grade material at Sierra de las Minas, processing that material by conventional methods should yield gold profitably.
MM: What is the rationale behind your sampling programme and what are you looking to achieve through this work?
PH: There are two elements to our sampling programme. One is metallurgical, for the purposes discussed above. The other is exploration. There are such extensive gold occurrences within the Sierra de las Minas project area, across multiple prospects, that we still don’t know as much as we’d like to about what we’ve got there. As well as improving the level of knowledge we have with regard to our existing priority prospects, such as El Abra, a key objective of our exploration sampling is to prioritise other prospects we control but haven’t yet formed a clear view on so that we can focus further work on prospects most likely to deliver mineable high grade material.
MM: What are the options available to undertaking production and why is toll mining the favoured approach?
PH: The obvious way to proceed would be to look at the conventional route of building a plant close to our deposits and processing the material mined there and then. This would give us complete ownership and control of the operation, but would inevitably require a fair amount of capital. Toll treatment, which means sending the material mined away by road and possibly rail to an existing plant owned by another company, would require much less capital and would probably allow us to generate cashflow from the project more quickly. For those reasons, toll treatment is at this stage the favoured option for ECR.
MM: Can you summarise what further steps are needed before toll mining can take place, including any licencing and environmental investigations?
PH: If we choose to mine a deposit for which we already have an exploitation permit - and there are several of these including the El Abra deposit - then the main legal step is the receipt of certain environmental permissions from the government of La Rioja Province. For a deposit located within one of our exploration tenements, we would need to convert the area covering the deposit to an exploitation permit and then deal with the relevant environmental requirements.
On the operational side, we need to establish that sufficient high grade material exists and is mineable, then we need to mine it before shipping the ore mined off to be processed. This is largely a matter of drilling, metallurgical testwork and commercial discussions with a toll treatment partner, as well as ticking the necessary permitting boxes. Right now we are methodically working through these steps in order to assure ourselves and our shareholders of the viability of this concept. Assuming that we are successful in doing so, we would then move to commence mining using relatively simple surface methods and conventional equipment.
MM: Do you have any operational aspirations or targets for the early phase of production, in respect of specific mining activities, tonnages and grade?
PH: It is a little too early to talk tonnages and grades with confidence, which is what our ongoing work programmes are aimed at allowing us to do, but a reasonable target might be to mine and process 200,000 tonnes at an average grade of 5g/t gold over a few years, equating to around 30,000oz of contained gold. This might not sound a lot, but 30,000oz multiplied by the spot price of gold per oz is more than US$50M, and we would expect costs to be relatively low and our operations to generate very useful profits.
MM: Taking a longer term strategic view how could you develop the project?
PH: The strategy at Sierra de las Minas is not only to commence small scale production for its own sake, there is a bigger picture. If the Sierra de las Minas project can support a larger scale mining operation to produce perhaps several hundred thousand oz of gold, then we will work towards that. But ascertaining whether the project can do so will require investment in exploration, and we hope to fund this through the small scale production we are planning for the near term. If it transpires that the project is appropriate for no more than small scale production, then we hope that this will nevertheless leave us well funded to pursue other avenues. The fundamental goal is to make ECR that rare thing, a mineral exploration company that is self-funding to a significant degree.
ENDS
DISCLOSURE: MiningMaven principals own shares in ECR Minerals
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