Equus Mining (ASX: EQE) has begun working on a mine re-start study at its Cerro Bayo project in Chile after new drill results confirmed shallow gold and silver mineralisation below the old Taitao pit.
This means the deposit is potentially suitable for an “open-pittable” production scenario.
Equus has an option with Toronto-listed Mandalay Resources to acquire all the Cerro Bayo mining properties, resources and mine infrastructure, including a 1,500 tonnes per day processing plant now on care and maintenance.
The area was mined between 1995 and 2000 by silver giant Coeur d’Alene (now Coeur Mining, which is listed on the New York Stock Exchange). The mining was initially from the Taitao open pit, then from underground operations.
Last month, Equus completed 1,385m of drilling at the pit to confirm historical data. This, together with drill data generated by previous owners, will provide the basis for a JORC resource statement and a mine re-start study.
Drill results include 19m at 1.26 grams per tonne gold and 10.0g/t silver, with mineralisation being hit at 68.5m below surface; this hole included 9.6m at 1.93g/t gold and 12.3g/t silver.
The next hole drill returned 12.5m at 1.45g/t gold and 30.9g/t silver from 36.8m.
Meanwhile, a review of historical drilling from the NE Taitao location has identified substantial wide and well-mineralised zones beneath the current pit floor, including 19m at 4.4g/t gold and 27.4g/t silver.
Historic drill results from Central Taitao also found several mineralised zones including 16m at 2.5g/t gold and 104.3g/t silver.
Low cost re-start opportunity
Taitao was mined up to mid-2000 when the gold price was around US$300 per ounce and silver US$5/oz — compared with today’s prices, gold being around US$1,700/oz (a 580% increase) and silver US$17.50/oz (up 250%).
Equus managing director John Braham said the company has inherited a large and valuable set of historical exploration, drilling and post-production data.
“These [latest] results are solidifying our long-held belief that the Cerro Bayo is one of the most exciting near-term, shovel-ready projects on the ASX,” he said.
The company now has the opportunity for a “relatively” low-cost re-start, coupled with the present gold and silver prices and its own South American expertise.
Options now being look at include processing stockpiles of previously uneconomic material.
Further current and historical data will be released in the coming weeks, the company said.