Para Resources has a novel approach to gold exploration
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.
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.
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.