Continental Gold (CNL.TO) was expected to receive its final permit to build a large, high-grade gold mine at the Buriticá project in Colombia this summer.
This hasn’t happened yet, so Continental announced this morning they’re going to pursue the final Environmental Impact Assessment from the National Government of Colombia as a Project of National Strategic Interest (Proyectos de Interés Nacional y Estratégicos ("PINE"), rather than Corantioquia, the autonomous regional authority for the department of Antioquia. No timeline was provided.
Ari Sussman, President and CEO, said the company was “disappointed” it couldn’t deliver on completion guidance. “But we are very confident that the application process will be handled on an expedited basis, and we will complete it well ahead of there being any impact to our critical path timeline. We look forward to working with the national government in bringing the Buriticá project to a commercial reality."
Shares closed at $2.03, down 51 cents or 20%, on the Toronto stock exchange Tuesday.
"The establishment of the PINE initiative was the result of the national government's desire to advance large-scale projects in a timely fashion for the benefit of all Colombians, and it was designed to comprehensively address the challenges involved in moving large-scale projects forward," stated Leon Teicher, Executive Chairman. "I am confident that the approval process for our refiled application will be thorough and handled in a professional and efficient manner. We plan on building Buriticá to world-class standards and welcome the opportunity to demonstrate that the Company is committed to achieving the highest standards in environmental and health and safety."
The go-ahead for Buritica has hinged on the receipt of its final Environmental License. This, plus a 30-year Mining License received in 2013, are the last major permits required to build and operate the mine. Buriticá is the first large-scale underground gold mine to be permitted in Colombia in many years.
The Buriticá deposit has a combination of attributes that are rare for a gold miner: size, grade, exploration potential and excellent metallurgy. At average grades of 10.8 grams per tonne (M&I, 3 g/t cutoff), Buriticá's grades are multiples of the world average, and the company's projected cash costs of $389-$431 per ounce are in the lowest quartile of gold mines globally. A preliminary economic assessment from November 2014 outlines an 18-year mine life that would produce about 265,000 ounces of gold and 394,000 ounces of silver annually.
Mr. Sussman has said the Colombian authorities have been outstanding partners, and were very involved in an 18-month multi-faceted environmental assessment process for Buriticá.
The Buriticá project is 74 kilometres northwest of Medellin, near a paved highway, in the heart of the Mid Cauca Gold Belt. The project area consists of two mountain slopes that converge on a valley. The valley is where Continental intends to build its infrastructure. Sussman says they considered everything from 1,000-year rainstorms to how to deal with the management of water, which flows from the mountain slopes to the valley. Continental will build an aqueduct for a nearby village to ensure a steady water supply, despite no evidence that the mine will drain water from local communities.
“The main emphasis of this project is on supporting the community from a social and environmental standpoint,” Sussman said in a June 2015 interview. That includes using environmentally safer dry-stack tailings instead of a riskier tailings dam.
Buriticá’s proposed tailings will be filtered and dried before compaction, and the dry stacks stored in a lined facility in the valley abutting the hillside. “Dry-stacked tailings facilities are more expensive to build but far more reliable than wet tailings ponds, with no risk of spills,” Sussman said. “Once you compact dry tails, they don’t go anywhere. It’s like cement.”
Continental will outline its exploration plans soon for the balance of its 60,000-hectare property. So far they have identified over 80 veins at Buriticá, all of which are contained within only two vein systems. An additional 6 vein systems have yet to be drill tested. These remaining targets have equally prospective surface signatures to Buriticá’s primary Yaragua and Veta Sur vein families. With working capital of $45.4 million as of March 31, 2015, Sussman says Continental is fully financed through the Feasibility Study expected in 2016.
Back in March 2015, Tomas Gonzalez, the federal Minister of Mines and Energy, said he saw no issues with Continental’s Buriticá project. He said he expected the permit to come in May 2015.
Here's today's news release: Continental Gold Elevates the Environmental Permit Application for the Buritica Project to the National Level
Follow the discussion at http://chat.ceo.ca/cnl
Disclosure note: author is long CNL.TO shares at the time of writing and Continental is a past CEO.CA Summit sponsor. As such, we are biased. This post may contain errors and is not intended to be investment advice of any kind. Always do your own due diligence and consult with a licensed investment advisor prior to making any financial decisions. It's your money and your responsibility.
This article contains or refers to forward-looking information under Canadian securities legislation, including statements regarding the estimation of mineral resources, results of the PEA, advancing the Buriticá project, exploration results, potential mineralization, potential development of mine openings, potential improvement of mining dilution grades, timing of an updated mineral resource estimate, and exploration and mine development plans, and is based on current expectations that involve a number of significant business risks and uncertainties. Forward-looking statements are subject to other factors that could cause actual results to differ materially from expected results. Readers should not place undue reliance on forward-looking statements. Factors that could cause actual results to differ materially from any forward-looking statement include, but are not limited to, an inability to advance the Buriticá project to the next level, failure to convert estimated mineral resources to reserves, capital and operating costs varying significantly from estimates, the preliminary nature of metallurgical test results, delays in obtaining or failures to obtain required governmental, environmental or other project approvals, political risks, uncertainties relating to the availability and costs of financing needed in the future, changes in equity markets, inflation, changes in exchange rates, fluctuations in commodity prices, delays in the development of projects and the other risks involved in the mineral exploration and development industry. Specific reference is made to the most recent Annual Information Form on file with Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. All of the forward-looking statements made in this press release are qualified by these cautionary statements, and are made as of the date hereof. The Company assumes no responsibility to update them or revise them to reflect new events or circumstances other than as required by law.
Differences in Reporting of Resource Estimates
This article was prepared in accordance with Canadian standards, which differ in some respects from United States standards. In particular, and without limiting the generality of the foregoing, the terms “inferred mineral resources,” “indicated mineral resources,” “measured mineral resources” and “mineral resources” used or referenced in this press release are Canadian mining terms as defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resources and Mineral Reserves (the “CIM Standards”). The CIM Standards differ significantly from standards in the United States. While the terms “mineral resource,” “measured mineral resources,” “indicated mineral resources,” and “inferred mineral resources” are recognized and required by Canadian regulations, they are not defined terms under standards in the United States. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian securities laws, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. Readers are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into reserves. Readers are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, United States companies are only permitted to report mineralization that does not constitute “reserves” by standards in the United States as in place tonnage and grade without reference to unit measures. Accordingly, information regarding resources contained or referenced in this press release containing descriptions of our mineral deposits may not be comparable to similar information made public by United States companies.