Minera signs LOI for Peru project

Shares in Perth-based gold mining junior Minera Gold have risen by 25 per cent after the company signed a letter of intent with a private Peruvian entity to utilise a 200-tonnes-per-day CIP gold circuit for its Torrecillas gold project in Peru.

The three-year agreement will allow Minera to source gold and other high-grade ore within the company’s 16,000-hectare concession.

A further 15,000ha of concessions that are owned and controlled by Minera’s new partners will be assessed for joint venture prospects in the prospective iron-oxide-copper-gold belt.

“The concessions owned by our new partners are highly prospective, located in a well-established IOCG area and an additional area known to host high-grade copper-gold-silver and gold veins,” Minera chairman Alex Losada-Calderon said.

“The technical strength of Minera Gold is very attractive to our partners, particularly given that members of our senior management team, including myself, have spent considerable time in the region and on some of the properties owned by our partners.”

The decision to enter the processing agreement came from previous quarter costs of more than $US450 an ounce and the potential for significant improvement in gold recovery.

Scheduled execution of the agreement is currently mid-January 2014 and Minera expects a significant decrease in processing costs per tonne, with an increase in gold recoveries.

“For more than 12 months we have been assessing alternate processing options in the region surrounding our operations and firmly believe that this agreement will not only provide us with a modern processing facility, but also a great local partner for future growth opportunities – a partner who is committed to operating a modern and efficient processing operation,” Minera managing director Ashley Pattison said.

Minera will upgrade security at the CIP circuit by implementing its own security personnel and will be able to access laboratory facilities at the processing plant on an agreed basis.

The owners of the facility will retain control of the copper circuits and provide shared infrastructure services, while Minera's metallurgical team will manage the CIP circuit.

Any capital expenditure will be deducted from the variable processing fee to recoup CAPEX amounts within 12 months.

Shares in Minera have risen 25 per cent after a voluntary trading halt, trading at 0.5 cents per share as of 10am, WST.