It’s been a while since Goldgroup updated the market on its projects, so we got in touch with the company and asked for an update.
Cerro Colorado
Based on the last NI43 resource estimate, Cerro Colorado currently has a remaining life of mine of approximately 15 months. Goldgroup has been conducting exploration drilling outside the current pit limits, so we are expecting another resource update early next year. Although Cerro Colorado obviously isn’t the company’s flagship project, we hope production at Cerro Colorado can continue for another few years, as the operational cash flow takes care of all overhead costs. The operational cash flow at Cerro Colorado was approximately $4.5M in H1 2012 and covered all administrative expenses.
They are also looking at improving the secondary crushing system by replacing a cone crusher structure, allowing the crush size to be reduced to minus one inch, which is expected to improve recoveries and to improve the reliability of the secondary crusher. The new crushing system is expected to be installed in October 2012.
Caballo Blanco
Goldgroup is currently addressing the comments from SEMARNAT on the ETJ application for Caballo Blanco, and after completion, is expected to resubmit an enhanced ETJ application to SEMARNAT in the fourth quarter of 2012. The company currently continues to advance the Caballo Blanco project in areas such as necessary land and surface rights acquisitions, permitting, engineering studies and geological studies.
Exploration drilling at Caballo Blanco continued with three drills until the beginning of the wet season in June, thereafter the Company suspended drilling. Since, the current drilling results at the La Paila zone are considered sufficient for mine planning and drilling has now been halted.
San José de Gracia
Currently, there is minimal exploration work being conducted at San Jose de Gracia. Goldgroup is focused on bringing Caballo Blanco into production, and will allocate resources to San Jose de Gracia accordingly.
Corporate
As of June 30, Goldgroup had a working capital position of approximately C$22.5M, so they absolutely won’t have to raise more capital at the current low prices. Getting Caballo Blanco permitted is Goldgroup’s main objective over the coming 12 months, and will be the main catalyst that might cause an appreciation in the company’s share price. If the project gets the green light before next summer, we expect production at Caballo Blanco to commence 12-14 months thereafter.
Disclosure: The author holds a long position in Goldgroup Mining Inc. Please see our disclaimer for current positions.
