PanTerra Gold to enter Cuban JV to develop La Demajagua gold-silver deposit

PanTerra Gold ASX PGI Cuba La Demajagua Geo Minera SA
PanTerra Gold is forming a joint venture with Cuba’s state mining company to potentially develop an open pit mine at a gold-silver deposit on the Isle of Youth.

The Cuban government has approved a proposed joint venture between PanTerra Gold (ASX: PGI) and state-owned mining company Geo Minera SA to develop the La Demajagua gold-silver deposit on the Isle of Youth.

The development will be undertaken by a Cuban registered company, Minera La Victoria SA (MLV), which will be 51% held by Geo Minera and 49% held by PanTerra’s Cayman Islands-registered wholly-owned subsidiary, PanTerra Gold Investments Limited (PGIL).

Subject to the success of feasibility studies, the joint venture intends to develop an open pit mine to produce about 60,000 tonnes per annum of concentrate with an anticipated grade of around 47 grams per tonne of gold and 380g/t silver (based on metallurgical test work).

The open pit mine has an expected operational life of about six years, which could be followed by an underground mine for an additional 10 years, PanTerra said.

Resource definition and development studies

Mining consultants have reviewed 55,000m of drilling undertaken primarily by Canadian exploration companies; however, this was not to JORC standards and the La Demajagua deposit’s estimated resource therefore cannot be reported to the ASX.

As such, the consultants have recommended a 5,000m drilling program to be undertaken during the pre-feasibility study to establish a JORC-compliant inferred resource and preliminary mine plan.

A further 20,000m drilling program is planned to follow during the definitive feasibility study stage, which is expected to improve the resource category and permit the finalisation of the mine design.

According to PanTerra, the joint venture company MLV will start the pre-feasibility study “as soon as the COVID-19 pandemic permits”. The study is estimated to cost US$1.2 million (A$1.83 million) and will take between 10-12 months to complete.

The study will determine whether the best option would be to sell the concentrate the mine produces or to process it on site through a processing plant to produce dore for refining.

PanTerra has completed preliminary economic assessments for both options – with the concentrate option estimated to cost US$60 million and the dore option to cost US$130 million – but comparative returns are yet to be assessed.

Funding share

Funding for the pre-feasibility study will be provided by PanTerra as part of its equity contribution to the joint venture.

Under the terms of the joint venture agreement, PGIL will contribute a total of US$6 million (A$9.16 million) for the two studies over a two-year period.

Subject to a development decision, the PanTerra subsidiary will subscribe a further US$7 million (A$10.7 million) of equity in MLV to secure its 49% stake. This additional amount will be spent on mine development infrastructure.

According to PanTerra, financing for the La Demajagua project’s development is “likely” to be sourced from a combination of cash reserves, equipment supplier credit, loans, future share issues by PanTerra, or by its PGIL subsidiary to partners or strategic investors.

The registration of the joint venture and incorporation of MLV is expected to occur before the end of June.