Core Gold (CGLD.V) has released the initial assay results from its drill campaign on the Linderos gold project in Ecuador, where it was following up on excellent trenching results.
Some of the holes contain high-grade gold mineralization at Linderos with for instance almost 6 meters at 10.78 g/t gold starting at a depth of 36 meters which appears to be the higher grade zone of a much wider 59.9 meter interval grading 1.44 g/t gold (which indicates the average gold grade over the residual 53.96 meters was just 0.41 g/t. Another hole highlighted by the company contained 7.8 meters of 5.25 g/t gold starting at a depth of 41 meters which also is a higher grade interval within a zone of 19.6 meters containing 2.27 g/t gold. Calculating the average gold grade in the residual interval yields an average of 0.30 g/t over 11.8 meters.
The other holes also contained mineralization but either the average grade was relatively low, or the mineralization was located quite deep. A low-grade system isn’t necessarily an issue as Core Gold could consider concentrating the rock on-site before shipping it to the existing mill. Keep in mind the Portovelo mill near the past-producing Zaruma mine is a ‘sunk cost’ which means the development cost of Linderos will be very low, making lower grade ore viable as well.
The Portovelo mill continues to perform well, as Core Gold produced 5,784 ounces of gold, which brings the total production in the first nine months of the year to 16,514 ounces. The company still wasn’t profitable nor free cash flow positive as the ‘mining and processing costs’ came in at $5.5M, which is almost $1000/oz. It will be interesting to see if these ‘other’ expenses will decrease once the final payments towards Elipe will end in the current quarter. As you remember, the Elipe subsidiary regained the ‘good standing’ status in September which means Core Gold regained full operational and financial control over the subsidiary. If a part of the ‘other costs’ were related to the payments of $712,000/month, we will see those expenses disappear from the current quarter on, which should result in a much better financial performance. And once the new Credipresto loan will be approved, Core Gold will have all financial flexibility it needs to expand the Portovelo plant which will unlock further economies of scale and drive the cash flow.
Go to Core Gold’s website
The author has a long posiiton in Core Gold. Core Gold is a sponsor of the website. Please read the disclaimer
