Small-cap gold miner Aguia Resources is making a big splash at its Santa Barbara project in Colombia, with gold now flowing, a maiden drilling campaign on the launchpad and processing upgrades coming thick and fast.
The company is regularly mining 15 tonnes per day (tpd) from its underground workings through to an onsite processing plant and is on its way to a 50tpd uplift by July. All the early signs are stacking up for it to achieve consistently high-grade gold.
Trial mining by previous operator Boyateca showed head grades of up to 24 grams per tonne (g/t) gold. Aguia is seeing similar results from its current operations. While an official grade reconciliation is pending, Aguia expects the recovered grades to mirror the historic results.
The current processing plant is geared to treat 30tpd and Aguia plans to double its mining output to match that capacity by mid-May. The doubling of throughput will come on the back of two key upgrades. The company is close to completing a new 5.5-kilometre water pipeline to enable a steady water flow for processing and the final piece of underground scraping equipment to ramp up vein extraction rates is being commissioned.
All the equipment for the improvements is onsite and should be ready to go before the end of the month, paving the way for the company to move onto its next milestone target of scaling up to 50tpd throughput by July.
To hit its higher processing target, Aguia is banking on the imminent arrival of a primary crusher. The new equipment is the last missing part in a crushing circuit that already includes secondary and tertiary units, which have boosted capacity to 30tpd.
When the new unit is in play and underground feed ramps up, Aguia says it is quietly confident the new circuit will have the scope to exceed its design capacity. This would allow the company to lift output well beyond its initial targets.
Turning to the financials, Aguia recently completed a $3 million placement to an Asian based institutional fund and should be comfortably funded until cash flow starts to kick in.
The company has jumped a critical bureaucratic hurdle by securing full government approval to sell its gold domestically and internationally.
The timing of the government stamp of approval had been an unknown quantity, but having it now allows Aguia to get on with its first gold sales against a backdrop of soaring gold prices, currently nipping at the heels of all-time highs at US$3400 (A$5223) per ounce.
Aguia Resources executive chairman Warwick Grigor said: “Aguia has been very efficient in its use of capital and achieved a level of success on a very tight budget at the Santa Barbara gold project. Having our CEO William Howe in country during this process has been instrumental to the success so far. We are now at the inflection point beyond which we expect to be earning significant cash.”
The company expects to fire up a 25-hole maiden diamond drilling program at Santa Barbara next week. The first drill campaign on the project is designed to test beneath existing workings as well as along strike. The company expects the drill bit to intersect known high-grade veins and potentially discover new ones.
Management is excited at the prospect of discovering any treasures lurking beneath the mine’s rugged surface. If drilling confirms the continuity and grade of the underground veins, Aguia could find itself sitting on a much larger prize than it initially thought.
The assay data will form the basis of an all-important maiden JORC resource, targeted for later this year.
Most of Aguia’s time in the past few months has been focused on bringing Santa Barbara back online and generating some juicy cash flow. The company has also moved forward on its plan to become an organic phosphate producer from its Pampafos deposit, which is part of its Três Estrades project in southern Brazil.
In a shrewd play to sidestep the hefty $26M price tag outlined in last year’s feasibility study, the company secured a 10-year lease on the fully functional Dagoberto Barcelos processing plant, which is 100km from Três Estradas.
The move comes with a reasonable monthly fee and a one-off BRL$5M (A$1.36M) payment, giving Aguia a fast-track route to production without the financial sting of building a plant from scratch.
The original study tipped the project to churn out $22M in annual EBITDA with a quick 2.9-year payback at its full 300,000tpa capacity.
Aguia plans to turbocharge the existing 100,000tpa facility by installing a hammer mill and second dryer - minor upgrades that could triple throughput and bring those projections within striking distance.
Feedstock will initially come from Pampafos, but Aguia is already drilling its nearby Mato Grande and Passo Feio prospects, just 3km and 8km from the plant respectively, aiming to slash transport costs and boost margins. A second processing facility is also on the cards, potentially setting up a multi-plant phosphate play to meet the booming demand for organic fertilisers in-country.
With Santa Barbara starting to hit its straps and Três Estradas just warming up to become a second significant cash flow stream in the next few months, Aquia appears to have finally moved on from its cash-constricting construction phase. The company seems to be firmly on an upward cashflow generating trajectory.
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