Sulliden Gold plans 87 700 oz gold-equivalent Peruvian operation

Canada-based project development company Sulliden Gold on Monday said it planned an 87 700 oz/y gold-equivalent operation in the Peruvian Andes.

The company reported the results of a feasibility study for its Shahuindo gold/silver project, which pointed to the operation being able to support production of 84 500 oz/y of gold and 167 200 oz/y of silver, from only 40% of the established oxide mineral resource.

The company said it planned to start with a low capital-cost and smaller-footprint operation, even when the current resources allowed for a significantly higher mining rate and production profile. It said the initial mining scenario would act as a foundation for future production growth by internally funding future expansions.

“We are pleased to be able to deliver an initial project study with modestly sized capital costs that we believe should provide faster cash-flow generation, expeditious permitting, and a shorter construction schedule," CEO Peter Tagliamonte said in a statement.

The feasibility study, completed by Kappes, Cassiday & Associates and Mine Development Associates, attached a net-present after-tax value, using a 5% discount rate, of $248.6-million to the project. The total gold-equivalent production over the life-of-mine (LOM) expected to be 909 500 gold-equivalent ounces.

Sulliden planned to start mining at a rate of 10 000 t/d at its fully owned epithermal gold/silver deposit, which would produce gold at about $552/oz. The feasibility study mine plan has a LOM average gold grade of 0.84 g/t and an average silver grade of 9.5 g/t.

The first phase of the mine would cost about $131.8-million to construct and the sustaining capital over the envisioned ten-and-a-half years LOM was stated at $47.8-million.

The feasibility study used base-case prices of $1 415/oz of gold and $27/oz of silver for its products, which provided the project with a pretax internal rate of return of 52.2%, generating $ 52.1-million average yearly after-tax cash flow, with a payback period of 2.2 years.

The Shahuindo project had current measured and indicated resources of 147.31-million tons grading 0.54 g/t gold equivalent, for 2.43-million ounces of gold and 33.37-million ounces of silver. The total proven and probable reserves of the project was 37.84-million tons grading 0.85 g/t gold-equivalent, containing 1.02-million ounces of gold and 11.56-million ounces of silver.

The next step for the company would be to complete and submit to the Peruvian Ministry of Energy and Mines the environmental and social impact assessment report as part of the project's permitting process, which was expected before the end of December.

Sulliden said it would now focus on debt financing discussions with significant mobile equipment manufacturers to acquire the mobile equipment fleet of the mine.

The Toronto-listed stock of the company, which has a market capitalisation of C$282-million, traded nearly 5% lower at C$1.16 apiece on Wednesday.

Edited by: Creamer Media Reporter

Bolivian silver project rocked by kidnappings, property destruction

A long-simmering dispute involving indigenous communities, illegal mining, and the Malku Khota mining project in the Andean Potosí region has erupted into kidnapping and property destruction.

News media reports say up to 10 persons working for a subsidiary of Canadian junior, South American Silver, are being held hostage by Bolivian indigenous community members in the Andean Potosí zone.

On June 28, mining engineers Fernando Fernandez and Agustin Cardenas, employees of Bolivian South American Silver subsidiary, Compañia Minera Malku Khota (CMMK), were seized by residents of Malku Khota, a town 217 miles south of La Paz, Bolivia's Minister of Mining and Metallurgy, Mario Virreira, said Tuesday.

"They will be punished for kidnapping, laws are very clear in our country, there can be very drastic sanctions and they will be punished," he told official state news agency, Agencia Boliviana de Información.

La Razón Digital reported three other technicians employed by a private contractor working for Malku Khota were kidnapped Monday afternoon along with 15 other employees who were released Monday because they were Obejería community members.

El País reported a group of between 70 and 100 community members who oppose the mining project attacked a second camp of Malku Khota Monday night where they destroyed all equipment and kidnapped 18. The governor of Potosí, Félix González, said he is unable to confirm El Pais' story.

Interior Minister Carlos Romero told Cadena A Television that the leader the captors want released is Cancio Rojas, "accused of kidnapping, torture and other offenses." Spanish news agency EFE reported the governor of Potosí region said the Potosí indigenous took the hostages to demand the government free their leader, Cancio Rojas. The kidnappers also commanded the government reject the Malku Khota project.

One faction of the indigenous people living in the area has been trying to force out Minera Malku Khota whose operations the illegal miners see as an obstacle to their own gold mining efforts, according to reports by EFE.

Virreira claimed that he found among the community members a guidance document entitled, "Protecting Your Community Against Mining Companies and Other Extractive Industries." The mining minister asked Bolivia's attorney general to lead a thorough investigation on the origin and the authors of the document.

As of early Wednesday morning, South American Silver had not posted a comment regarding the kidnapping on its English language website. However, in a June 15 news release, South American Silver said, "Officials from the Bolivian Ministry of Mines recently met with the local indigenous communities near the Malku Khota project and confirmed that a small group of people carrying out illegal artisanal mining on exploration concessions owned by South American Silver have been encouraging confrontations between communities and attempting to interfere with work on the projects."

"Groups associated with this illegal artisanal mining activity have joined with activists from outside the local community and have recently held protests in La Paz and are now protesting near the project site," South American Silver observed.

Greg Johnson, CEO of South American Silver, said, "We have been working hard for years to build the trust and support of local indigenous communities, and we're proud of the fact that the vast majority recognize the social and economic benefits this project will bring to their families and their communities."

"These protests by outside activists and groups associated with illegal artisanal mining are acting against the state wishes and best interests of the local indigenous communities," he asserted. "In addition to the local communities, the provincial government of Potosí and the national government of Bolivia have sown their consistent support for this project and to private investment generally in the country's mining sector, the second most important economic driver after oil and gas."

South American Silver says its Malku Khota project is "one of the world's largest silver-indium-gallium resources." A Preliminary Economic Assessment says Malku Khota has the potential to mine more than 13.2 million ounces of silver, 80 tonnes of indium and 15 tonnes of gallium annually for the first five years of production.

With an estimated 15-year mine life, the operation would also produce several million pounds of by-product lead, copper and zinc, according to the PEA.