Mr. Ignacio Salazar reports
OROSUR MINING INC. -- EXPLORATION & DEVELOPMENT UPDATE FOR URUGUAY AND COLOMBIA
Orosur Mining Inc. has provided an update of its exploration and development activities in
Uruguay and Colombia.
Highlights:
Uruguay: development:
-
Construction of the San Gregorio West underground mine is on budget
and on track to commence production toward the end of second quarter fiscal 2017, with
over 328 metres of horizontal development completed to the end of first quarter fiscal 2017.
Uruguay: exploration:
-
Exploration drilling in and around the San Gregorio UG area has
yielded positive results, which are expected to significantly enhance
mine economics and increase reserves and resources in the short and
medium term.
- An eastern continuity of the current San Gregorio West UG mineralized
orebody has been drilled from an underground station with seven
diamond core holes. These holes were aimed at testing the continuity
of the mineralization between the existing San Gregorio West and East
underground reserves. Drilling intersected significant
gold mineralization in every hole. Further drilling is under way.
- Initial results from diamond drilling at San Gregorio East UG have
demonstrated consistent and attractive mineralized intercepts and are
expected to validate and increase reserves.
- Previous drilling of a deeper mineralized extension located beneath
the San Gregorio West UG has demonstrated continuation of
mineralization at depth, and the company is planning a six-hole diamond
drilling campaign from surface to further test and confirm this
mineralization.
- Uruguay open-pit brownfields exploration and development activities
have shown success in exploration at Don Tito, and additionally the
re-evaluation of targets at the existing Santa Maria and Peru open-pit
mines indicates the potential for additional production to the current
mine plan at gold prices at or above $1,300 (U.S.) per ounce.
-
As part of continuing Uruguay greenfields exploration, an encouraging
geological reinterpretation of the San Gregorio -- Arenal corridor -- has
been developed. If proved to be successful, this would unlock an area
of approximately 25,000 square metres to new exploration with the objective of
discovering deposits of similar characteristics as San Gregorio or
Arenal.
Colombia: exploration:
-
At the company's high-grade Anza project in Colombia, initial
preliminary metallurgy and density testwork has been completed, with
average gold recoveries ranging from 95.9 to 96.1 per cent utilizing a
combination of gravity concentration, flotation and cyanidation
processing, in line with the metallurgical recoveries of the
development projects and producing mines in the region.
Ignacio Salazar, chief executive officer of Orosur, said: "We are pleased to be able to report such a positive exploration and
development update across our portfolio of gold assets in Uruguay and
Colombia. Thanks to our operational performance, positive operating cash
flow and the further strengthening of the gold price this year, the
company resumed more active and aggressive exploration work earlier in
the year.
"Development at our San Gregorio West underground project is advancing
according to plan and on budget, with production due to commence at the
end of Q2 FY17. We achieved positive drilling results in a number of
exploration projects in Uruguay, most notably in locations at depth,
along strike and immediately adjacent to our current San Gregorio West
underground development with the potential to add reserves, expand the
project and improve its economics via additional synergies. I'm
delighted with the hard work our team has delivered to achieve these
positive results and look forward to the next stages of the exploration
program in the coming quarters.
"At our Anza gold project in Colombia, positive preliminary
metallurgical results in line with peers in the immediate region
represents a derisking of the project, and our team are preparing a
geological model with which to plan our next exploration phase at Anza."
Uruguay underground projects
Development of the San Gregorio West underground mine (SGW UG mine)
The company continues to make steady progress on the construction and
development of the SGW UG mine, the second mechanized underground mine
in Uruguay (after Arenal). SGW UG is a continuation at depth of the
historical San Gregorio open-pit deposit, which, to date, has produced
approximately 536,000 ounces at an average grade of 2.12 grams per tonne. Development
tunnelling extended a horizontal length of 328 metres during the recent
quarter. Development has reached the point where ventilation fans will
be positioned, a key milestone in commencing production as anticipated
toward the end of second quarter 2017. The raise-boring machine, which was required to
construct the ventilation shaft, has been commissioned. Mine development
at the SGW UG mine has to date been accomplished while sharing equipment
and personnel with continuing production at the Arenal UG mine in an
efficient and safe way.
Potential for significant expansion of the San Gregorio West
underground mine
During fiscal 2017, the company intends to expand the SGW UG operations with
three neighbouring underground projects. These projects are the San
Gregorio East underground, Deeper Extension of the SGW UG and the San
Gregorio Underground Central area. The last two projects relate to areas
which were not considered in the SGW UG mining plans and represent new
opportunities with a strong potential for near-term resource and reserve
delineation.
Potential for expansion of San Gregorio East underground reserves
San Gregorio Underground East (SGE UG) is contiguous and east of the
SGW UG. The area is currently being diamond drilled to validate
and increase its reserves. The company is committed to drilling an
initial 3,000-metre program during fiscal 2017. Preliminary results to this point
have demonstrated consistent and attractive mineralized intercepts.
PRELIMINARY DRILL RESULTS
Hole ID From (m) To (m) Intercept Including
SGDD16-060 147.1 160.3 10.3 m of 2.60 g/t -
SGDD16-061 215.1 220.1 5.0 m of 1.10 g/t -
SGDD16-063 175.9 180.9 5.0 m of 1.69 g/t -
SGDD16-064 169.8 184.9 15.3 m of 1.22 g/t 5.1 m of 1.77 g/t
SGDD16-067 153.3 162.4 9.2 m of 0.50 g/t 3.5 m of 0.80 g/t
Potential for delineation of new reserves below SGW UG
The Deeper Extension of the SGW UG is an area located immediately
beneath the SGW UG sector. This area is not considered in the current
mining plans for SGW UG. Previous drilling has demonstrated the
continuation of the mineralization at depth and at multiple depths.
These historical intercepts show encouraging gold intercepts.
HISTORICAL INTERCEPTS
Hole ID From (m) To (m) Intercept
SGDD002 434.3 437.6 3.3 m of 2.6 g/t
SGDD003 656.7 661.3 4.6 m of 3.1 g/t
As a result of these intercepts, the company is initially planning to
drill six long diamond core holes, from surface, to further test and
confirm this mineralization. Following a positive result, a further
campaign to define and increase reserves in the area is expected to
proceed.
San Gregorio Underground Central (SGC UG) -- a new mineralized area in
the core of SG
SGC UG corresponds to the eastern continuity of the current SGW UG
mineralized orebody and sits in between the latter and the existing SGE
UG reserves. Seven diamond core exploratory holes have been drilled from
the SGW UG ramp, aimed at testing the continuity of the mineralization
between the SGW UG and SGE UG reserves. Results received to date intersected
significant mineralization and demonstrate reason for further
exploration. During first quarter fiscal 2017, the company drilled seven holes, with
mineralized intercepts as laid out in the attached San Gregorio Underground Central drill results table.
SAN GREGORIO UNDERGROUND CENTRAL DRILL RESULTS
Hole ID From (m) To (m) Intercept Including
DDHUGSG16-024-01 113.9 121.9 8.0 m of 4.57 g/t -
DDHUGSG16-024-02 110.2 115.8 5.7 m of 1.43 g/t -
DDHUGSG16-024-03 119.6 124.8 5.2 m of 1.65 g/t -
DDHUGSG16-024-04 110.4 123.0 12.6 m of 2.42 g/t -
DDHUGSG16-024-05 142.2 160.0 17.9 m of 1.47 g/t 6.45 m of 2.42 g/t
DDHUGSG16-024-06 139.4 143.9 4.5 m of 1.34 g/t -
DDHUGSG16-024-07 92.7 109.1 16.4 m of 5.53 g/t 7.8 m of 11.17 g/t
These results indicate the strong potential to significantly improve the
economics of the entire SG UG project. Any SGC UG reserves will benefit
from the extensive development and mining activities occurring at
present and planned in the future at the SGW UG mine in construction.
Uruguay open-pit brownfield projects
The company's suite of open-pit projects in Uruguay is currently being
re-evaluated for potential development and production activities in the
current gold price environment. Based on the company's internal economic
analysis, some targets at the Santa Maria and Peru mines appear to be
economic at or around $1,300 (U.S.) per ounce, which could result in additional
10,000 to 12,000 ounces gold to the current mine plan.
In the Sobresaliente area, approximately six kilometres north of San Gregorio, the
Don Tito exploration project contains an anomalous area with high-grade
intercepts. This area has historical artisanal workings, with gold
occurring in quartz veins hosted in granite similar to the orebodies
mined previously at Sobresaliente, in operation during 2011 to 2013,
producing 21,667 ounces of gold at an average grade of 1.04 grams per tonne gold.
Exploration work completed to date consists of five diamond holes, seven
reverse circulation holes and seven trenches.
EXPLORATION WORK
Hole ID Type From (m) To (m) Intercept Including
DTDD001 Diamond drilling 37.0 51.2 14.2 m of 0.34 g/t 1 m of 2.1 g/t
DTDD002 Diamond drilling 17.8 28.5 10.7 m of 1.33 g/t 3.0 m of 3.64 g/t
42.7 46.2 3.50 m of 1.37 g/t 0.55 m of 4.75 g/t
58.3 74.5 16.15 m of 1.79 g/t 0.85 m of 25.63 g/t
DTRC002 Reverse circulation 37.0 42.0 5.0 m of 1.08 g/t 1.0 m of 2.91 g/t
48.0 52.0 4.0 m of 0.50 g/t 1.0 m of 1.47 g/t
DTRC003 Reverse circulation 14.0 18.0 4.0 m of 1.52 g/t 1.0 m of 4.93 g/t
39.0 50.0 11.0 m of 0.72 g/t 2.0 m of 1.68 g/t
DTRC004 Reverse circulation 25.0 31.0 6.0 m of 0.80 g/t 1.0 m of 1.6 g/t
41.0 46.0 5.0 m of 0.31 g/t
DTRC006 Reverse circulation 2.0 4.0 2.0 m of 1.51 g/t 1.0 m of 2.52 g/t
16.0 27.0 11.0 m of 0.65 g/t 3.0 m of 1.40 g/t
DTRC007 Reverse circulation 5.0 9.0 4.0 m of 0.49 g/t 1.0 m of 1.23 g/t
21.0 28.0 7.0 m of 0.69 g/t 1.0 m of 2.22 g/t
DTTR14-001 Trenching 69.5 83.0 13.5 m of 4.07 g/t 3.0 m of 14.81 g/t
DTTR14-002 Trenching 21.7 24.0 2.3 m of 1.49 g/t
DTTR14-003 Trenching 19.0 48.0 29.0 m of 0.26 g/t 2.0 m of 0.62 g/t
DTTR14-004 Trenching 8.0 12.0 4.0 m of 1.11 g/t
DTTR14-005 Trenching 71.0 75.0 4.0 m of 2.17 g/t 1.0 m of 6.86 g/t
DTTR14-007 Trenching 8.0 15.9 7.90 m of 0.33 g/t 0.6 m of 1.67 g/t
Don Tito drilling and trenching exploration results
The company has two other projects in the area near Don Tito and plans
to progress exploration in the Sobresaliente district with the objective
of adding open-pit reserves as soon as the exploration permits are
received from the Uruguayan Mining Department (Dinamige).
Uruguay open-pit greenfield projects
As part of a comprehensive geological evaluation of the economic and
geologic features of the San Gregorio area, an encouraging geological
reinterpretation of the San Gregorio -- Arenal corridor -- has been
developed. Geological data, including geophysics, drilling, trenching
and soil sampling, indicate a promising new geological model, which, if
proved, would open an area of approximately 25,000 square kilometres to new exploration
with the objective of discovering deposits of similar characteristics as
San Gregorio or Arenal.
Additionally, in southern Uruguay, a number of high-grade, low-tonnage
targets have been identified for further exploration and development
work, with the goal of treating and processing this potential ore in the
San Gregorio plant, as part of the company's multifocal approach to
extend mine life and increase production. The permitting process for
confirmatory and/or exploration drilling at these projects is currently
under way.
Colombia
The company continues its efforts to advance its high-grade gold-zinc Anza
project.
The company has received positive results for its metallurgical testwork on material from the Anza gold system. Preliminary metallurgical
testing from composites was undertaken to characterize the ore. Gravity
concentration, flotation, cyanidation and bond tests were performed on
the samples. The tests were conducted at ALS Metallurgical Laboratory in
Santiago, Chile.
As indicated in drilling intercepts and as expected, the metallurgical
tests confirmed the deposit contains areas with high zinc, lead and
copper values. Gold occurred either free, or associated with pyrite, and
the bulk of samples demonstrated a cyanide-only gold recovery of
approximately 87 per cent, when whole ore was leached with cyanide at 500 parts per million
using a grind size of 106 micrometres (P80).
Limited samples were also processing through a combination of gravity
concentration, flotation and cyanidation and demonstrated gold
recoveries ranging from 95.9 to 96.1 per cent, in line with the metallurgical
recoveries of the development and production stage mines in the region
and belt.
This work is preliminary, and opportunities exist to improve the
metallurgical leaching recoveries, especially on some particular samples
types, where recoveries declined associated with the presence of talc or
calcite. These initial results indicate that processing options may
likely be a combination of concentration, flotation and cyanidation,
with a final configuration to be defined as the project progresses and
the understanding of the gold-bearing mineralization, its byproducts
and gangue are better evaluated and understood.
Specific gravity was measured on three master samples and 13
composites with an average density of 2.61 grams per cubic centimetre with a maximum of 2.74
grams per cubic centimetre, a minimum of 2.47 grams per cubic centimetre and a standard deviation of 0.06.
The company is currently engaged in developing a geological model to
better understand the gold mineralization and its distribution in the
Pastorera-Aragon trend, where the bulk of the historical exploration
work has been carried out. A better understanding of the geological
features controlling gold mineralization should allow for a more
accurate assessment of the regional potential and what steps are best
suited and required to define a preliminary resource estimate at the
high-grade Anza gold project.
With positive initial metallurgical results in hand, the company intends
to finalize a geological model during third quarter fiscal 17 with a view to evaluating
the options through which to most effectively and swiftly advance the
Anza project.
Qualified person's statement
The technical information related to the current assets of Orosur Mining
in this presentation has been reviewed by Miguel Fuentealba, a mining
engineer who is considered to be a qualified person under NI 43-101
reporting guidelines. Mr. Fuentealba is a graduate in mining engineering
from the University of Santiago de Chile and is an AusIMM member and
qualified person of the Chilean Mining Commission. Mr. Fuentealba has 20
years of professional experience in the field of mining engineering,
mine development and management.
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