Faina proves gold for Orinoco as it prepares for positive cash flow this month

Orinoco Gold ASX OGX Faina project Brazil drill core
Drill core from Orinoco Gold's Antena prospect.

Initial assays from drilling at Orinoco Gold’s (ASX: OGX) Antena and Xupe deposits, part of the Faina project in Brazil, have identified extensions to the historic Xupe gold mine, as the company prepares for positive cash flow from Cascavel this month.

Assays from the company’s reconnaissance drilling program at the deposits returned 21.7m grading 4.49 grams per tonne gold from 144m, with several higher-grade intervals including 10.2m grading 7.74g/t gold, and 1.5m grading 11.36g/t gold.

Orinoco kicked-off an 11-hole drilling campaign across the deposits in March to target deeper extensions to historic pits.

The deposits are covered by existing mining leases and are only 8km from Orinoco’s flagship Cascavel gold operation in the region.

Should the rest of the assays be similar, Orinoco’s plan is to fast-track the deposits back into production.

In addition to the 11-hole program testing mineralised extensions, Orinoco is carrying out an in-pit optimisation study evaluating the amount of gold left in the historic pits at the project.

However, any restart would remain dependant on positive cash flow from Cascavel.

Cascavel gold operation

After a shaky start, Cascavel has been giving up a continuous flow of high-grade gold for Orinoco.

A review identified the existing gravity circuit was unsuited to economically recovering Cascavel gold. The company then initiated a back to basics approach, which has proved a boon for the company.

As part of the back to basics approach, Orinoco started a hammer mill pilot program late last year. Since then, the project has recovered numerous bonanza gold grades with each processing campaign.

In the latest campaign, 88 gold samples were processed from the Mestre zone at the mine, with the highest grading samples including 300g/t, 254g/t, 235g/t and 162g/t.

The average grade for the batch was 46.39g/t gold.

Each panel sample was 2m in length and weighed up to 20kg.

The third hammer mill in the pilot program was commissioned in March with the mill pencilled in to begin processing the higher-grade ore in early May.

Cash flow positive in May

As output at hammer mill three is ramped up and higher-grade ore is processed, Orinoco anticipates generating positive cash flow this month.

During the March quarter, Orinoco mined 3,990.4t of ore from Cascavel and processed 3,017t to achieve 258.1 ounces of gold.

To assist with the operation, a new bobcat has been ordered to drive more efficient mining in the terrain.

Orinoco also plans to install a fourth hammer mill on site.

“The first quarter of 2018 was an important transitional quarter for the group,” Orinoco chairman Joe Pinto said.

“I am very pleased with the progress so far of our ‘back to basics’ strategy which has been driven on three key principals of cutting costs, turning around Cascavel and selective value-added exploration on our exciting tenement package,” he noted.