Para Re­sources has a novel ap­proach to gold ex­plo­ration

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On for­ma­tion, Para Re­sources (PBR:TSXV)

es­tab­lished cri­te­ria that would aim to pro­vide a re­turn on in­vested cap­i­tal and de­risk and fund the ex­plo­ration po­ten­tial.

The busi­ness now owns two projects with highly prospec­tive ex­plo­ration po­ten­tial where there are ex­ist­ing min­ing and milling op­er­a­tions that can gen­er­ate cash flow to sup­port the ex­plo­ration cost.

The pur­chase of the ex­ist­ing and fully per­mit­ted mines and fa­cil­i­ties could dra­mat­i­cally re­duce ex­plo­ration risk when the small min­ing op­er­a­tions gen­er­ate cash flow and pro­vide re­turns as stand-alone en­ti­ties. In both cases the com­pany is tar­get­ing mul­ti­mil­lion ounce de­posits.

This is a novel ap­proach to de­vel­op­ing po­ten­tially ‘world class’ as­sets. In ad­di­tion, Para is un­usual in that the In­sid­ers have in­vested more than $20m of their own cap­i­tal and own ap­prox­i­mately 70% of the equity.

Para’s man­age­ment team is sea­soned and proven hav­ing dis­cov­ered, built, man­aged and sold sev­eral dif­fer­ent mines over the last 40 years.

The com­pany has two ma­jor projects: the Gold Road Mine in Ari­zona, USA and the El Li­mon Mine in Zaragoza, Colom­bia.

The Gold Road Mine in Ari­zona, USA

In Au­gust 2017, Para, through its 88% owned sub­sidiary Gold Road Min­ing Corp., ac­quired the Gold Road Mine, in­clud­ing patented claims and a mill and pro­cess­ing fa­cil­ity, lo­cated in the his­toric Oat­man Min­ing Dis­trict in Northwestern Ari­zona.

The Oat­man Dis­trict is the largest pri­mary gold pro­duc­ing dis­trict in Ari­zona with a his­tor­i­cal gold pro­duc­tion in­clud­ing Gold Road (not equiv­a­lent gold) of more than 2.1 mil­lion ounces.

IN­TRO­DUC­ING… PARA RE­SOURCES a ju­nior gold min­ing and ex­plo­ration com­pany with as­sets in Ari­zona and Colom­bia

The vast ma­jor­ity of the pro­duc­tion has come from two sub-par­al­lel vein sys­tems, the Gold Road sys­tem and the Tom Reed-United Eastern (TrUe vein) sys­tem.

In ad­di­tion to th­ese two sys­tems there is a third vein sys­tem, the Pi­o­neer-Mid­night sys­tem, which is south­west of the Tr-Ue sys­tem for which pro­duc­tion records are mostly un­known. The dis­tance be­tween th­ese veins is less than 1 kilo­me­ter.

Para has se­cured the rights to all of the patented and un­patented claims along the Gold Road and the Tr-Ue veins which in­cludes the sites of the his­tor­i­cal un­der­ground mines.

Th­ese mines mostly ceased pro­duc­tion in 1942 as a re­sult of the US war ef­fort. It is im­por­tant to note that the mines stopped pro­duc­tion while still min­ing high grade ore.

Sig­nif­i­cant po­ten­tial iden­ti­fied

Para be­lieves that there is sig­nif­i­cant po­ten­tial to re-open th­ese mines and to process the ore at Gold Road which is ap­prox­i­mately 1km away on a paved road.

In Fe­bru­ary 2018, Para pub­lished a NI 43-101 Tech­ni­cal

Re­port on the Gold Road Mine and in April 2018, a NI 43

101 Tech­ni­cal Re­port on the Oat­man Gold Min­ing Dis­trict for the Tr-Ue vein. Both re­ports rec­om­mend multi-year ex­plo­ration plans that to­gether tar­get an ad­di­tional 1,600,000 to 2,150,000 ounces for a to­tal es­ti­mated cost of $14.2m, to be spent over mul­ti­ple cam­paigns.

All min­er­al­iza­tion in the dis­trict is in ep­ither­mal quartz, cal­cite, adu­laria veins con­tain­ing cyanide leach­able gold, and sil­ver. The ab­sence of en­vi­ron­men­tally sen­si­tive con­stituents (RECRA met­als) and acid-gen­er­at­ing min­er­als sig­nif­i­cantly re­duces per­mit­ting and recla­ma­tion is­sues.

The Gold Road mill is a mod­ern 500 ton per day (tpd) cyanide leach fa­cil­ity de­signed specif­i­cally to treat the Oat­man-type min­er­al­ized ma­te­rial. His­tor­i­cal re­cov­er­ies have been in ex­cess of 95%. The fa­cil­ity is fully per­mit­ting al­low­ing Para to in­crease pro­duc­tion from 500 tpd mill to 1,000 tpd.

The mine is cur­rently fully per­mit­ted to restart, in­clud­ing a re­cently up­dated tail­ings dis­posal site that has the ca­pac­ity for 1,750,000 tons (10 years at 500 tpd). The tail­ings are dry stacked.

In May of 2018, Para pub­lished a NI 43-101 Pre­lim­i­nary Eco­nomic As­sess­ment on the Gold Road Mine by RPA Global, to demon­strate ro­bust fi­nan­cial re­sults for the case of restart­ing the mine. Some of the key high­lights in­clude: an $81.3m net present value NPV at a 5% dis­count with $1,200 per ounce gold price, ini­tial cap­i­tal of $5.7m, and a sev­enyear mine life with 1.1 mil­lion tons of ma­te­rial re­cov­er­ing 214,000 ounces of gold with an av­er­age di­luted grade of 6.5 grams per ton.

The NI 43-101 Tech­ni­cal Re­port authors be­lieve the re­source at Gold Road can be in­creased by over 700,000 ounces through an un­der­ground drilling pro­gram.

The Gold Road mine will restart op­er­a­tions in the first quar­ter of 2019 with fi­nal de­vel­op­ment and re­ha­bil­i­ta­tion work un­der­way now on the mill and a con­tract miner mo­bi­lized to site.

El Li­mon Mine

Para bought the El Li­mon

SINCE THE PUR­CHASE, PARA HAS UP­GRADED THE MILL’S CA­PAC­ITY FROM 75 TPD TO 225 TPD BY ADDING A SEC­OND BALL MILL AND IN­STALLING NEW FLOATATION AND CYANIDE CIR­CUITS

Mine in 2016 with a mi­nor­ity Colom­bian part­ner. Para has in­vested $10m to up­grade and re­ha­bil­i­tate the mill and un­der­ground op­er­a­tions. Para now owns 83% of the El Li­mon project. In ad­di­tion, Para ac­quired 22,000 hectares of min­eral rights sur­round­ing the Mill site.

This prop­erty is the ba­sis of an ex­plo­ration pro­gram that is cur­rently un­der­way. The ex­plo­ration prospec­tive on the prop­erty is ev­i­denced by the pres­ence of hun­dreds of small ar­ti­sanal min­ers who are work­ing the sur­face or the near sur­face of the vein sys­tem that runs through the OTU val­ley. This is the same vein sys­tem that is be­ing mined at El Li­mon.

There are a se­ries of par­al­lel veins that run for 12km across the com­pany’s prop­erty. The El Li­mon mine is suc­cess­fully min­ing that vein sys­tem at a depth of 450 me­ter and the sys­tem is open at depth. The av­er­age di­luted head grade from the un­der­ground op­er­a­tion is be­tween seven and 10 grams per ton.

The feed for the El Li­mon mill will come from a com­bi­na­tion of ore from the El Li­mon un­der­ground mine, from other small mines on the prop­erty that are run by Para and from the small ar­ti­sanal min­ers who are work­ing on the com­pany’s prop­erty.

The Colom­bian Govern­ment, in an ef­fort to end the use of mer­cury and to bring th­ese small min­ers into the for­mal econ­omy, has a pro­gramme that al­lows the min­eral rights holder (Para) to for­mal­ize th­ese pre­vi­ously il­le­gal op­er­a­tions, thus cre­at­ing an al­ter­nate source of ore for the El Li­mon mill from th­ese con­tract min­ers.

This so­lu­tion to deal­ing with the small min­ers al­lows govern­ment to col­lect roy­alty, the min­ers make more money sell­ing the ore to Para and Para gains ac­cess to low cost ore where is the to­tal cost of ac­quir­ing and process the ore re­sults in a cost of $750 per ounce. In ad­di­tion, this sys­tem pre­vents the gold that is on the com­pany’s min­eral con­ces­sions from be­ing sold out­side of the com­pany’s con­trol.

Up­graded ca­pac­ity

Since the pur­chase, Para has up­graded the mill’s ca­pac­ity from 75 tpd to 225 tpd by adding a sec­ond ball mill and in­stalling new floatation and cyanide cir­cuits. The mill re-started op­er­a­tions in June 2018 in­clud­ing with feed from his­tor­i­cal tail­ing to con­firm through­put, re­cov­er­ies, and met­al­lur­gi­cal bal­ance.

Also in June 2018, the El Li­mon mine was restarted with four sep­a­rate de­vel­op­ment ar­eas, and an up­grade of the main hoist. In July 2018, the mill re­ceived the first ship­ments of ma­te­rial from for­mal­ized min­ers on Para’s prop­er­ties.

Third party ship­ments in­creased sig­nif­i­cantly in Oc­to­ber to 30 tpd and are ex­pected to steadily in­crease un­til plant ca­pac­ity is achieved. The com­pany ex­pects the El Li­mon op­er­a­tion to be cash flow pos­i­tive in Q1 2019 with the pro­duc­tion ramp-up com­pleted in Q2 2019.

Fu­ture plans

Para says it will con­tinue to look to take ad­van­tage of cur­rent mar­ket con­di­tions to ac­quire and de­velop ad­di­tional highly eco­nomic, near-term pro­duc­tion as­sets that have strong ex­plo­ration and de­vel­op­ment up­side.

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