Behre Dolbear felt that Estrella with virtually no stripping, a 70% plus recovery, as opposed to 66% for the larger PDG plan, could support 120,000 oz at a cash cost of $90, and a capex of $35-50, certainly not requiring high POG for the 1,163,000 oz. halo portion. It's the other million ounces in the PDG plan that is sub-economic, not Estrella.
To really make this scenario work they could use another 500,000 oz. And the drill hole locations are pretty straightforward and no mystery to Millar's people (I spoke with a key one). Section 4225 is one bet for more: a few closely spaced holes where the old PDG holes missed the feeder because they ran them at right angles to the strike. Also shoot for more bonanza feeders (such as the prior 80m @ 8.5 g) a little deeper through out the zone as the old drilling was wide spaced at depth. And finally follow up the successful one hole drills at San Carlos and El Victor. I see the chances of coming up goose eggs on those as very low. The chance for a major enhancement are as good as anywhere on the planet.
<enough money to test out other targets at Salamandra.>
The plan is to take some "trial mining" off the prime Cerro and Bienvenidos pits, to bust loose some dinero. They aren't going to rush out and attack all over Salamandra initially, only very selectively and using the late stage PIMA technology that proved a successful application when PDG used it towards the end. That's what has drawn me to this, as I think they can get a lot of leverage and mileage, without a big dilution of shares. The plan is well conceived.
<local people problems>
People problems doesn't characterize the issue here. A poor ejido deal made by PDG does. But is it as bad as the critics make out? From my offering memorandum: US$225/ha for exploitation and US$75/ha for exploration. The year 5 and beyond exploitation taxes with Mexico have also kicked in and are expensive. The total annual payment for this from the partners is about US$372K, a nuisance at this stage, but not a project killer, and I'm sure they will attempt to cut another deal. Additionally, the partners might just return some of the marginal "garbage" surface rights found in the old PDG pit outline in the area towards the town (Pueblo Mulatos).
<NGT and AAS must split>
They play their cards right, they will eventually be splitting 10 million ounces, not 1.2. |
