Amarillo Gold (TSXV: AGC; US-OTC: AGCBF) has used a new resource model to reinterpret the Posse gold deposit and update the resource estimate for its Mara Rosa gold project in Goias State, Brazil. The company says the new methodology fundamentally alters its understanding of mineralization at Posse.
The updated resource model spans three contiguous zones and includes a higher grade core that Amarillo could access early in the mine’s life.
The higher grade zone contains 8.9-million measured and indicated tonnes grading 2.2 grams gold per tonne for 630,000 oz. gold.
The Posse deposit contains 29-million measured and indicated tonnes at 1.2 grams gold for 1.2 million oz. gold. It also contains 1.4-million inferred tonnes at 0.7 gram gold for 30,000 oz. gold.
The company bases its updated resource estimate on 344 drill holes, including 44 new diamond drill holes and 11 new reverse circulation holes for infill drilling totalling 12,700 metres.
In a prepared statement, Amarillo CEO Mike Mutchler calls the new resource model “more conservative and robust.”
The previous estimate, included in a September 2018 prefeasibility study (PFS), outlines 12-million measured tonnes grading 1.4 grams gold for 560,000 oz. gold and 19-million indicated tonnes grading 1.2 grams gold for 710,000 oz. gold, as well as 11-million inferred tonnes at 0.92 gram gold for 330,000 oz. gold.
According to the PFS, Posse has a US$244.3 million after-tax net present value at a 5% discount rate and a 50.8% after-tax internal rate of return.
The company intends to use the updated resource model in a feasibility study it aims to finish by the end of the year.
Amarillo shares are trading at 26¢ in a 52-week range of 19¢ to 32¢. The company has a $29-million market capitalization.
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