Brio advances Santa Luz in Brazil

Brio Gold (TSX: BRIO) has finished a positive preliminary economic assessment (PEA) for its C1 underground resource at its flagship Santa Luz project in Bahia State, Brazil, adding half a million oz. gold and proposing a combined open-pit and underground mine.

Santa Luz already features a fully built open-pit facility that was active from 2013 to 2014, before entering care and maintenance to optimize gold recoveries.

“It was one of those mines that was fast-tracked into production,” Brio president and CEO Gil Clausen says during a phone interview with The Northern Miner.

“Gold reconciliation was good — but they didn’t do enough technical work to do a full characterization of the deposit and a full geometallurgical model.”

Clausen says that half of the orebody has 0.67% organic carbon and its impact on flotation was not properly tested. Yamana Gold (TSX: YRI; NYSE: AUY), the mine’s previous owner, concluded the organic carbon was outcompeting the activated carbon in the carbon-in-leach circuit (CIL). The organic carbon was concentrating up to 8%, absorbing the gold before filtering out to the tailings pond.

“Imagine this layer of fine organic carbon on top of the CIL circuit,” he says. “So in fact, the company was experiencing gold recoveries of 35–40%.”

Shortly after, the plant was put on care and maintenance. That was when Brio took over.

“We needed to understand and build a full geometallurgical model,” Clausen says. “We had to redo all the test work like it was a brand-new project. In fact, we redrilled the entire deposit.”

The company ran its own tests and decided on a system that uses kerosene to “blank the organic carbon in the orebody,” followed by a resin-in-leach circuit that gave consistent 84% recoveries, even when the two types of ore were blended.

Brio CEO Gil Clausen says that resin pellets have fixed a lot of Yamana’s original problems. Credit: Brio Gold.

“The resin pellets have a much better affinity to gold than even activated carbon does,” Clausen says. “Over time you’ll see resins overtake carbon in the gold industry.”

The underground part of the PEA says stoping could begin in 2021. Brio intends to start a 5,000-metre infill program in 2018 to convert some of the underground resource from the inferred category to measured and indicated. It is also exploring a possible combined underground and open-pit mine design for a forthcoming prefeasibility study. Underground development would not interfere with open-pit mining.

“We did an integrated mine plan and the effect that it had in a general sense is that it completely eliminated the stripping hump — where you have a peak stripping in some of the mid years,” Clausen says.

In the integrated model, the company supplemented lower-grade ore from the underground mine into daily production.

“If we kept the milling rate the same at 7,400 tonnes per day and put in ores that were 2.5 to 3 grams gold and supplemented 1.5-gram-gold material, you’d get better gold production at a lower cost,” Clausen says. “And you’d schedule them together and blend that out over the life-of-mine, and it would improve the net present value.”

The company says the underground mine could produce 62,000 oz. gold per year over nine years at an assumed gold price of US$1,300 per ounce. It aims to produce 2,500 tonnes per day at the underground mine to go along with the open pit’s 5,000 tonnes per day. Both are expected to average 84% gold recoveries.

Brio says the underground resource could add half a million oz. of gold to the mine’s total production. Credit: Brio Gold.

“It’s the same lithology as the open pit. It’s only constrained by the economics of the ultimate pit shell. It’s the same orebody — it’s continuous.”

Brio estimates US$74 million in development costs for an underground mine and US$23 million in sustaining capital, with a 27% internal rate of return. It projects an all-in sustaining cost (AISC) of US$778 per oz. and an after tax net present value (NPV) of US$103 million at a 5% discount rate. The open pit has a US$812 per oz. AISC and US$208-million after tax NPV.

Based on a September 2017 feasibility study, Santa Luz’s open-pit reserves contain 28 million proven and probable tonnes grading 1.39 grams gold per tonne for 1.3 million oz. gold, with 11.4 million measured and indicated tonnes measuring 1.9 grams gold for 695,000 oz. gold.

The company intended to restart open-pit production at Santa Luz in December 2018 and mine 1 million oz. gold evenly over 10 years. It says that the underground resource could add 511,000 oz. gold and extend the mine life by three years.

“We hope to expand on the zones because it’s wide open for the prefeasibility phase,” Clausen says. “And we need to do a few metallurgical holes to confirm the recovery numbers that we have in the PEA.”

Brio has three other Brazilian projects in production.

In 2016 it acquired Riacho dos Machados in Minas Gerais. The mine has been active since 2014 and produced 31,714 oz. gold that year. 

It owns Fazenda Brasileiro, which lies 180 km northwest of Salvador and has been active in underground mining since 1984, producing 70,887 oz. gold in 2016, as well as Pilar in central Goias, which produced 87,061 oz. gold in 2016. 

Brio became an independent company after being spun out of Yamana in late 2016. Its share price has stumbled steadily since, peaking at $3.51 in January 2017, but dropping to a new 52-week low of $1.54 in December 2017. The company has a $187-million market capitalization. Shares have since rebounded and trade on Jan. 25 at $2.60.