Aquiline feasibility looks past cyanide ban (April 02, 2007)

A provincial ban on cyanide in Rio Negro, Argentina, means the word “bankable” couldn’t be used for Aquiline Resources’ (AQI-T, AQLNF-O) “initial” feasibility study on its Calcatreu gold project.

The use of cyanide in mining has been illegal in Rio Negro since June 2005, but Aquiline director and executive vice-president Martin Walter says the company plans to work around the ban.

“We believe that projects like Calcatreu eventually get built because of their importance to those sorts of provinces,” Walter says. “What we need to do is work with the government and local communities and work through the issues they have with cyanide and come up with a prudent solution that will allow the project to go ahead.”

Walters says a closed-circuit cyanide process that is monitored and controlled under international cyanide codes would be the ideal solution.

“It’s a matter of us trying to convince the government that there is a safe process to go forward,” he says.

In the meantime, Aquiline’s goal is to expand resources at Calcatreu.

The study put the potential mining inventory at 2.5 million tonnes of ore grading 3.86 grams gold per tonne and 33.22 grams silver for 435,000 oz. gold and 3.7 million oz. silver.

Calcatreu would be a 2,000-tonne-per-day open-pit mining operation that would produce 97,000 oz. gold equivalent per year at a cash cost of US$280.83 per oz. over 4.5 years.

“In terms of economics it’s pretty good, but it needs a longer mine life,” Walter says. “We want to push the project beyond the million-ounce mark.”

The current project is based on the Vein 49 and Nelson deposits, but there are nine other veins on the property. Aquiline is hunting for potential satellite deposits within trucking distance of Vein 49. The company began a 4,000-metre drill program in December, which will continue through 2007.

Walter says the company is looking to increase the mine life to eight years before developing the project.

“Once you start to increase the mine life, the economics will become extremely robust,” says Walter.

The feasibility study did not look at underground mining, Walter points out, but the potential is there.

Indicated resources are about 6.2 million tonnes grading 3.04 grams gold per tonne and 28.1 grams silver, or 602,540 oz. gold and 5.6 million oz. silver.

Inferred resources stand at 1.9 million tonnes grading 2.01 grams gold and 19.4 grams silver, or 126,000 oz. gold and 1.2 million oz. silver.

Total capital costs ring in at US$79.15 million with an operational cost of US$41.50 per tonne of ore and a cash cost of US$280.83 per oz. The internal rate of return is 14%, based on a gold price of US$500 per oz. and a silver price of US$8 per oz.

Aquiline also has the Navidad silver project in Chubut province, Argentina, which was the subject of an ownership battle with IMA Exploration (IMR-V, IMR-X) in British Columbia’s Supreme Court last year. IMA is currently appealing a ruling that put the property into Aquiline’s hands, and is scheduled to appear in court on April 10, 2007.