Flagship is weighing up the option of choosing a low-capital, low-cost heap leaching operation that removes the need for crushing equipment and the resulting crushing and processing operations. The simpler process places ore on a heap leach pad and irrigates it with a leaching solution to dissolve the gold for recovery.
Heap leaching is considered more cost-effective from a capital investment basis than a traditional crushing and milling process, as it does not require a tailings dam and benefits from lower energy and water consumption. However, the process usually results in a lower gold recovery rate.
Due to the difference in initial and ongoing costs, Flagship needs to assess the trade-off between the two different pathways before deciding on an option.
To improve the cost benefits of going down the heap leach path, the company is considering the benefits of dump-leaching. After drilling, blasting and then loading the material into a dump truck, the ore is then stacked directly onto the heap leach pad area to be prepared for irrigation.
This removes the continual process of handling material from a truck to the run-of-mine pad or stockpile, then to a crusher, to a further stockpile after crushing-screening and then to the heap leach pad. Less movement will improve the economics of material handling within the mine.
For maximum effectiveness from leaching, the oxide material will need to be of a size conducive to the process – a question being interrogated by the testwork.
Flagship is looking to follow in the footsteps of the nearby Rio2 Fenix Gold Project, 40 kilometres north of Pantanillo, which is embracing the dump-leaching process. The oxide material at both sites is similar and Rio2 has been achieving recoveries of 75 per cent from utilising dump-leaching on ore grading 0.48g/t gold.
Notably, many of the world’s largest gold players operate heap leach operations due to their simplicity and high margins, even when the grade of gold is between 0.5–1 per cent and, in some instances, below 0.5g/t gold.
Barrick Gold’s Veladero operation, with a 0.68g/t gold-equivalent grade, Kinross Gold’s Fort Knox deposit at 0.34g/t gold-equivalent and Newmont Corporation’s Cripple Creek grading 0.45g/t gold-equivalent utilise heap leaching to extract gold.
A further positive is Pantanillo’s proximity to several massive gold operations, including Newmont-Barrick’s mammoth 27M-ounce Norte Abierto gold mine, 40km southwest of Flagship’s ground, Kinross’ 10.7M-ounce Maricunga gold project, 25km west, and Hochschild’s monster 11M-ounce Volcan gold project, just 10km northwest of Pantanillo.
Flagship recently inked a final five-year option over Pantanillo with a local Chilean entity. It paid a US$100,000 (A$160,000) deposit during the due diligence period. After satisfying itself of a wise choice, Flagship paid an additional US$100,000 to the vendor, which will be followed by four further annual payments totalling US$1.4M (A$2.18M).
Flagship can buy Pantanillo outright for a final US$11M (A$17.12M) payment on the fifth anniversary of the deal. There are no minimum spend or drill requirements.
Pantanillo hosts a foreign estimate non-JORC resource containing 47.4Mt grading 0.69g/t gold for 1.05M ounces.
While further testwork is necessary to determine the ultimate approach to mining at Pantanillo, the possibility open to Flagship to kick-start a low-cost entry into gold production at a time of roaring prices may warrant a “carpe diem” response from the aspiring gold producer.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
