Building a legit Peruvian toll-miller: Anthem United (AFY.V) update

POSTED ON May 12, 2015 BY Andrew Nelson
CATEGORY Anthem United,

“Over the next 6 weeks we expect to complete construction and commence commissioning of what we believe will be the newest, and one of the largest, industrial gold milling plants in Peru” says Greg Smith, CEO of Anthem United Inc (TSXV:AFY), of their 350 tonne per day Koricancha gold mill.

Mill crusher overview (Greg Smith photo)

Mill crusher overview- Scroll down for more Koricancha photos from Anthem United

This is a key milestone for the Company as they, along with their Peruvian based 25% joint venture partner EMC, have taken this project from an initial concept to production start-up in only 1.5 years.

The Koricancha mill will initially produce gold loaded carbon, itself a saleable commodity, and transport it to Lima via truck to have it refined to fine gold. The Company will then sell the fine gold or have it further refined to qualify as “Good Delivery” gold which is the LBMA (London Bullion Market Association) certified gold traded in the quoted market place (ie. Bullion exchanges, ETF gold holdings, or Central bank vaults).

Gold can only be certified as Good Delivery if it is refined in an LBMA certified refinery, for example those run by Metalor, a leading global precious metals refining company headquartered in Switzerland. In the future Anthem plans to evaluate the viability of producing gold and silver dore onsite - then exporting directly to a LBMA certified refinery, thereby shortening the chain and avoiding costs associated with producing and transporting loaded carbon.

Ore deliveries have been arranged for the initial commissioning of the mill. A nearby lab will initially be used to assay the ore feed; with an onsite lab to be constructed shortly. Anthem’s lab will be operated by an independent 3rd party to assist in determining the content, grade, recoverability, humidity, and overall quality of ore delivered by the small scale miners. The results of this testing are then used to determine the value of the ore.

Anthem is expecting to receive high-grade ore from small scale miners averaging 15 – 25 GPT (grams per tonne) and have used 20 GPT as a base case for economic studies. To put this into perspective the global average of producing gold miners is 1 GPT Au.

The key idea: Anthem will purchase ore at a discount to the spot price which protects the Company’s margins.

Anthem’s Koricancha mill is located in Chala’s historic mining region in southern Peru, where the majority of the country’s toll mills are located. There have apparently already been discussions around growing the company by building or acquiring a 2nd mill in the North of country where there is a lack of milling capacity but plenty of miners extracting high grade ore. This would allow Anthem to capitalize on the opportunity by providing services to the underserved miners who are often required to ship their ore over 1,500km’s to the south. This would, however, put them in direct competition with upstart Standard Tolling (TON) whose 100 tpd plant is expected to commence operations in the coming months.

The management of Anthem have a solid track record in precious metals and a significant interest in the success of the Company, holding 28M of escrowed shares (locked up) out of the 68M shares currently issued and outstanding. This is considered a positive indicator for shareholders as management’s interests are aligned and both parties are equally affected by the Company’s performance.

Recently CEO.CA correspondent and mining engineer Jamie Keech had the opportunity to visit several toll milling projects in Peru, including Anthem United’s, and will be releasing an in-depth look at the opportunities and pitfalls of the space in the coming week.

For now, keep a close eye on Anthem over the next few months; as it will be transitioning from a development company to a cash flowing, gold producer.

Here are more photos from the Koricancha mill from Anthem:

Koricancha Mill Overview and Tailings (Greg Smith photo)

Mill crusher overview (Greg Smith photo)

Fine Ore Conveyor

Crush Toward Tanks

Mill Site Overview

For more info on Anthem United, visit http://www.anthemu.com/ and follow AFY.V for updates.

Andrew Nelson

Andrew Nelson is pursuing the CPA designation as an auditor at Davidson & Co., the leading service provider for junior mining clients globally. Mr. Nelson has experience working with TSX venture listed explorers in Kazakhstan, Paraguay, Peru, Namibia, Madagascar, West Africa, United States, and Canada reporting under IFRS framework. He is an Executive Officer with Young Mining Professionals a not-for-profit which holds networking events for young professionals in Vancouver's resource sector. His interests are reporting on Canadian precious metal explorers and holding informative interviews with accomplished mining professionals. If involved in junior mining he would love to hear from you at Andrew.GM.Nelson@Gmail.com. More →

Twitter: @https://twitter.com/ANelsonMining

andrew.gm.nelson@gmail.com

Andrew Nelson

Twitter: @https://twitter.com/ANelsonMining

andrew.gm.nelson@gmail.com

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