Great Republic Mining Corp V.GRM

Goldrock's Matysek out to prove Argentina is a good bet

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https://www.northernminer.com/news/goldrocks-matysek-out-to-prove-argentina-is-a-good-bet/1003055588/

With money starting to become available for good projects, it seems owner Goldrock Mines (TSXV: GRM) should be able to find financing for its prime project. But one hang-up keeps getting in the way: Lindero is in Argentina. And the resource sector just doesn’t know what to think of Argentina.

The hesitation is understandable: Argentina’s prospective geology gets lost amidst the country’s ever-shifting politics and economic challenges. This is, after all, the country that defaulted on US$132 billion worth of international debts just 12 years ago, where rampant inflation seems to shatter the economy every decade or two, and where history shows a pattern of populist leaders nationalizing private sector holdings.

However, Argentina is also the 12th largest gold-producing country in the world. The nation has seen ten mines enter production in the last ten years. Half a million Argentineans work in the mining sector and the population is generally supportive of mining projects, including indigenous groups. The government also supports mining and fast tracks permitting processes once key boxes have been checked.

“All these people are pouring money into Argentinean oil and gas right now,” says Matysek, Goldrock’s president and CEO. “One of the best performing stocks on the Venture exchange this year is Madalena Energy (TSXV: MVN), a Canadian junior looking for unconventional oil and gas in Argentina. Yet people are too nervous to invest in mining in Argentina, even though the same regulations apply to both? It just doesn’t make sense.

“Every time we meet with potential investors, we spend the first 20 minutes explaining that things have changed, that Argentina wants mining,” Matysek continued. “And it really does want mining. Salta province is in love with Lindero.”

So what is this project Matysek believes in so? Lindero is a gold project in northwest Argentina’s Salta province. It is permitted for development into an open pit, heap leach mine that initially processed 15,000 tonnes per day (tpd), expanding to 18,750 tpd during the first year.

It’s a straightforward mine plan: open pit mining, three-stage ore crushing, conventional heap leaching, and a carbon adsorption-desorption-recovery plant. Life-of-mine gold recovery is projected at 68.3%.

During its first nine years of operation the planned Lindero mine would produce 109,000 oz. gold annually. It would cost US$703 to produce each of those ounces, as an all-in sustaining cost, which means the Lindero mine should generate a 33.4% after-tax internal rate of return based on a gold price of US$1,400 per oz. and a 5% discount rate.

According to the April 2013 feasibility study, it would cost US$155.4 million to build Lindero into this mine. The project’s high rate of return means the investment would be recouped in two years.

The idea is to start small – Lindero could support a bigger operation, but Goldrock wanted a low capital cost, small footprint mine initially. Once the modest heap leach operation is up and running, Goldrock would consider expansion.

The dioritic porphyry at Lindero hosts 128.7 million measured and indicated tonnes grading 0.52 gram gold per tonne and 0.1% copper, plus 59.7 million inferred tonnes averaging 0.37 gram gold and 0.09% copper. The reserve considered in the mine plan is considerably smaller: 65.5 million proven and probable tonnes grading 0.72 gram gold, for 1.5 million contained oz.

As such the defined 3.5-million oz. resource offers good potential for reserve expansion. In addition, Goldrock has outlined an initial resource at the adjacent Arizaro porphyry totaling 31 million indicated tonnes grading 0.34 gram gold plus 27 million inferred tonnes averaging 0.26 gram gold. Lindero is the northwest end of the Arizaro intrusive complex; the Arizaro porphyry system is at the southeast end of the complex, a few kilometers away, and in terms of surface expression is twice the size of Lindero.

Goldrock is now out searching for the US$155 million it needs to build Lindero. Matysek says they are considering all options, though the company’s stated goal is to secure US$100 million in debt, pull in US$30 million in equity, negotiate a US$35-million equipment leasing contract, and sign a US$15-million royalty.