Orinoco gets nod to develop gold mine

Orinoco Gold will make the transition from explorer to producer after receiving approval from its board to begin developing an underground mine at its Cascavel project in Brazil.

The West Perth-based company is aiming to begin producing gold by the end of the year, with excavation and development of the main incline shaft scheduled to commence next month.

The board’s approval follows completion of due diligence last month by Orinoco’s funding partner, Singapore-based private mining investment company Chancery Asset Management, which has agreed to provide up to $US8 million ($A10.2 million) in a gold sharing arrangement.

“This underpins the overall $14 million funding package for the development of Cascavel, which is based on an estimated capital outlay of $US6.6 million to establish a standalone initial 40,000 tonne per annum operation,” Orinoco said in a statement.

The Cascavel mine forms part of Orinoco's Faina goldfields project, located 120 kilometres south-west of AngloGold Ashanti's Serra Grande mine and Yamara Gold's Pilar mine.

Managing director Mark Papendieck said making the transition from explorer to producer was a big step for the company.

He said an overall construction timetable and contractor arrangements would be announced in the near future.

Orinoco shares were unchanged at 7 cents each at 12:45pm.