Ventana up on La Bodega resource and scoping study

Vancouver – Two and a half years ago Ventana Gold‘s (VEN-T) first hole into the La Bodega project in Colombia returned 107 metres grading 7.81 grams gold per tonne. Now, 266 drill holes later, La Bodega is home to an initial resource and a scoping study says an underground mine tapping into that resource would generate a 34% internal rate of return (IRR).

La Bodega’s first resource sits mostly within the La Mascota deposit, at less than 250 metres depth and along a 2,500-metre strike. The La Mascota Southwest Extension, Footwall Patches, and La Bodega deposits contribute the rest of the resource. Combined, the deposits contain 27.8 million inferred tonnes averaging 3.9 grams gold, 21.5 grams silver per tonne, and 0.14% copper.

While calculating the first La Bodega resource Ventana also completed an initial economic assessment of the project. The scoping study found that an underground mine sending 7,500 tonnes of ore to a processing facility could produce 220,000 oz. gold, 1.2 million oz. silver, and 5.4 million lbs. copper annually for 14 years. During that lifespan the cash cost to produce an ounce of gold would average US$364, net of byproduct credits. Total cash cost per ounce, including royalties, would average US$402.

The numbers look even better over the first six years, during which time production could average 301,000 oz. gold, 1.4 million oz. silver, and 6.9 million lbs. copper and cash costs should average US$322 per oz. gold.

It would cost US$297 million to build the proposed mine at La Bodega, which is in northern Colombia’s California gold district. The project carries a pretax net present value of US$807 million, using a 5% discount, and its 34% IRR would enable capital payback in less than three years. Ventana expects the project would be subject to an effective tax rate of 23%.

Gold at La Bodega is hosted in a series of northwest dipping, parallel sheeted vein zones, breccias, and mineralized faults within a broad, northeast trending regional fault zone.

The scoping study investigated an underground La Bodega operation producing 7,500 tonnes of ore daily via sublevel stoping, with transverse panels 20 metres high and 12 metres wide. Miners would need to keep 6 to 8 panels active at all times to maintain the planned production rate.

Employees and equipment would access the mine via a decline, while a vertical shaft would provide a high-volume transport route for ore. Even though the mine would, in most places, go no lower than 250 metres depth, the vertical shaft would be developed to 625 metres depth to facilitate production increases based on defining additional ore at depth.

The different deposits at La Bodega have different gold grain size distributions, which mean the processing facility plans calls for two routings. Ore from the La Mascota zone carries sufficient coarse gold to justify a gravity gold circuit. Once the ore has been stripped of its coarse gold, which accounts for 24% of its gold count, it would then be sent through a flotation circuit to create a copper-gold-silver concentrate. Finally, the flotation tails would be passed through a leach circuit to extract the remaining gold and silver, which will be poured into dore bars.

The deposit at La Bodega, however, does not contain coarse gold. As such it would bypass the gravity circuit and instead encounter just flotation and leaching. Overall gold recovery is expected to average 84%, after smelter deductions.

Ventana thinks there remains good potential to improve recoveries and simplify the metallurgical facility design. To that end, the company is currently reconfiguring the existing and permitted La Baja process plant, which it acquired when it bought the adjacent La Baja property, to operate as a pilot plant. Ventana believes commercial-scale testing data will enhance the design of the full scale plant.

The ore to feed the pilot plant will come from the decline being built in to the La Mascota and La Bodega zones. Both zones are open at depth but dip into the mountainside, making exploration at depth difficult. Deep holes from the surface have hit mineralization as deep as 500 metres. The 4.5-metre high, 3.9-km long tunnel will provide underground access to La Mascota and La Bodega and Ventana is planning a 70,000-metre drill program to test the deep extensions of both. The tunnel will also allow for extraction of bulk ore samples to feed the pilot plant.

The company will also continue to drill from surface. Over the next year surface drills will work to extend mineralization in La Bodega and La Mascota along strike while also defining additional resources in the newly-discovered Las Mercedes and Aserradero zones and at La Baja. Las Mercedes produced a 3-metre intercept grading 14.33 grams gold while Aserradero generated a 5-metre hit grading 23.18 grams gold. At La Baja, which is southwest along strike from La Mascota, initial drilling returned 15.2 metres grading 13.48 grams gold.

To fund development of the adit and continued exploration all over La Bodega, Ventana just raised $65 million by selling 6.5 million special warrants for $10 a piece. Each special warrant is exercisable into one share for no additional consideration.

Investors were impressed with the La Bodega resource and scoping study, lifting Ventana’s share price $1.43 or 15.3% in a day to reach $10.80. The company has a 52-week trading range of $6.12 to $12.91 and has 102 million shares outstanding, 112 million fully diluted.