News & Analysis » UK

Herencia Resources, Hochschild Mining, Trans-Siberian Gold news briefs

Herencia Resources has released a comprehensive review by an Independent Geophysical Consultant of the recent Paguanta IP survey data and corresponding geological datasets.

This news:

- Supports the potential extension of the Patricia mineralisation to over 1,600 metres
- Identifies the potential for a deeper porphyry style mineralising system at Paguanta
- Identifies six target areas, three of which are yet to be tested, others requiring deeper drill testing
- Confirms excellent correlation with the existing mineralisation (Patricia Mineral Resource).

FD Comment: Herencia is working towards a Feasibility Study for its 70% owned Paguanta silver-zinc-lead deposit. The use of IP data has proved to be extremely successful at Paguanta with excellent correlation between geophysical signatures and the known mineralisation at Patricia. The Company believes that these three untested targets could add to the current resource and although requiring drilling will further enhance the economics of the project.

Hochschild Mining PLC (Under Review) announced its production report for the three months ending 31 December 2012. The full year production of 20.3M oz of silver equivalent was in line with guidance, which remains virtually unchanged at 20.0M of silver equivalent for 2013. The 2012 production comprised 13.6M oz of silver and 111.8 k oz of gold. The acquisition of Andina Minerals gold deposit in Chile boosts long-term project pipeline and there has been further progress at the Advanced Projects and some strong brownfields exploration results.

KEFI Minerals have released an exploration update on it 40% G&M JV Jibal Qutman license including the results of a very positive initial internal scoping study and announced it has commenced the 2nd phase drilling at Selib North.

In this news:

- Diamond Drilling at Jibal Qutman returned encouraging intersections, including 4.5m at 17g/t Au, 12.75m at 3.78g/t Au and 13m at 2.35g/t Au
- Within the area drilled to date and also within a conceptual shallow open cut pit shell to 40-60m below surface, a preliminary first pass estimate of a combined mineralised zone of approximately >90,000oz Au can be calculated at an average grade of 1.25g/t Au, using a 0.2g/t Au cut-off. This is a very preliminary estimate only and is not a JORC compliant resource at this stage
- Positive results obtained from an initial internal scoping study for an open cut heap leach operation at Jibal Qutman
- Using local labour, power and mining costs, suggests that a "minimum pilot" deposit size, amenable to gold extraction by heap leach, of 80koz to 100koz at 1.2g/t to 1.3g/t Au would have a cash operating cost of $640/oz Au, requiring an estimated $12-14m of capital expenditure and would generate a cash operating profit of $80m over a 4 year mine life
- Diamond and RC drilling commenced at Selib North to follow up geophysical (IP and SP) and geochemical anomalies.

FD Comment: Whilst the drilling results are good, no doubt the market will focus on the initial internal scoping study. These are clearly very positive producing a cash operating profit of US$80m over 4 years for US$12-14m in Capex. However, it should be noted that these are very early intenal calculations. Both the gold estimates and scoping study are conceptual in nature and not code compliant and the there are no indication of timescales involved.

Trans-Siberian Gold PLC announced that mine development activities at Asacha in the fourth quarter of 2012 comprised approximately 964 metres, while ore extraction (including ore from stoping and mine development) amounted to 37,387 mt, the highest quarterly total to date. In the same period, an average 12,357 mt per month was processed by the Asacha plant. In the December quarter, ore processed was 37,070t grading 6.2g/t gold and 9.85g/t silver. 7,815oz of refined gold and 10,109oz of refined silver were produced.