Buritica overview. (Source: Continental Gold)

Buritica overview. (Source: Continental Gold)

Continental Gold outlined the Buritica gold project in a feasibility study for the first time, delivering strong-looking economics on one of the largest high-grade gold deposits in the hands of a junior.

Hurdles remain for Continental, permitting chief among them. But the feasibility study nonetheless crystallizes what the market should expect from Buritica if Continental Gold can clear regulators and get funding to build the project.

BURITICA NOW

The feasibility plan is tighter and higher grade than Continental Gold’s last iteration of the mining scenario in a 2014 preliminary economic assessment.

Back then it planned to mine 20 million tonnes @ 7.80 g/t gold and 19.35 g/t silver for 4.7m ounces gold and 7.1 million ounces silver, life of mine, in a 3,500 tonne per day operation with an 18-year mine life.

Now mine life drops to 14 years (albeit with lots more resources suggesting it could be a lot longer) with 25% less life-of-mine gold production at 3.5 million ounces in a 3,000-tonne-per-day operation.

Buritica grades improve, however, to 8.4 g/t gold and 24.3 g/t silver with 13.7 million tonnes in proven and probable reserves.

The economics of the scenario remain very compelling. Capital costs are virtually identical at $389 million and at $1,200/oz gold the Buritica feasibility study yields a 31% internal rate of return at a five-percent discount rate.

This is much the same as before, but with the important backing of feasibility confidence.

PERMITTING KEY

So what’s next? Continental Gold has ample cash (~$33m reported last September) to keep pushing Buritica forward through the year.

Permitting will be the chief concern with all eyes fixed on progress with regulators in Colombia. Continental Gold had hoped to fast-track permitting at the national level under a special program for projects of strategic importance, after failing to get traction with environmental regulators in the department of Antioquia.

But Colombia’s Constitutional Court recently said that national regulators won’t have sole permitting authority, meaning it looks like local regulators will have their say too.

Continental Gold (CNL-T)
Marketcap: $187m
Shares out: 129.5m

For more, see Continental Gold’s news release.

Continental Gold CEO Ari Sussman will be presenting at the upcmming Subscriber Investment Summit in Toronto on March 5, 2016. A few free tickets remain for CEO.CA subscribers. Register here.