In some of the earliest conversations I had with Brian there were hints of a potential project in the wings that might be transferred in under the arrangement with Geo Minera once it was proven that the current projects would indeed stand up and begin to make steps towards getting the product out of the ground..
That has proven harder than what it may have looked like back in 2021 and even earlier..
War in the Ukraine bringing normal supply routes to a halt, China agreeing (finally) that its free arsenic levels found in water, rice, 30 million peasants etc etc were above the WHO standards put a stop to the original La Dem offtake expectations and blew out the timelines to who knows when?
Ergo the rise of the Pilar (Nueva Sabana) shallow oxide gold project into pole position as new No.1 cashflow generator.
Which meant the hunt for the porphyry (which is a cashflow incinerator) went on to low heat when the lance missed its target by a whisker (Geo's being like weathermen are allowed a 50% hit ratio on all prospects and therefore it's always definitely directly below until parallax error & drill results say its not)
Now the other benefit of La Jacinta is that you can blend the ore with El Pilar with a level of confidence that early ore can be railed down the road to El Cobre for processing due to the infrastructure already in place.. La Jacinta had costed the plant build but that's as far as it got.. see below
Now if it can be arranged so that El Cobre takes the ore from both locations then it becomes a relatively low cost start up for both operations with a single plant focus for any capital requirements that tie in with existing plant processes..
This has the duel benefit of reducing capex markedly and also by bringing the free cashflow forward as you don't have to wait for a dedicated plant to be fully constructed, including ramp up, before you start shipping product and making money.
The same metrics below that apply to Pilar also applies for la Jacinta with the cost to toll lower than the cost to construct based on the estimates shown..
Numbers ay it's viable and if we consider El Pilar is possibly sitting on top of a Porphyry then you'd want to place the processing plant anywhere but on the lease next to the mine.. No one else can do a damn thing with the ground below until you stop processing, now can they?
Bump the Gold price to $2700 usd and NPV for Pilar hits $441m & La Jacinta $631m on current resource factors
Seems compelling... Thoughts?
H8tey
La Jacinta Gold Project has the following infrastructure:
Existing Infrastructure:
Access Roads: Gravel roads connecting to the national highway system
Exploration Camp: Basic facilities for exploration personnel
Drill Pads: Established drill pads for exploration drilling
Water Supply: Local water sources (wells or streams)
Electricity: Generators or potential connection to national grid
Planned Infrastructure (Feasibility Study 2015):
Processing Plant: 2.5 Mt/y capacity, conventional flotation and cyanidation
Tailings Storage Facility (TSF): Designed to store 10 years of tailings
Water Management System: Collection, storage, and reuse of water
Power Generation: 10 MW diesel or heavy fuel oil (HFO) generators
Fuel Storage: Storage facilities for diesel or HFO
Maintenance Facilities: Workshops, warehouses, and storage areas
Administration and Accommodation: Offices, living quarters, and amenities
Air Strip: Potential upgrade or construction of an air strip
Infrastructure Upgrades Required:
Road Upgrades: Improvement of access roads for heavy haulage
Bridge Construction: Potential construction of bridges for access
Power Line Connection: Connection to national grid or upgrade generators
Water Supply Expansion: Increased water supply for processing
Capital Costs (Estimated):
Processing Plant: $60-80 million
TSF: $10-15 million
Water Management: $5-10 million
Power Generation: $10-15 million
Fuel Storage: $2-5 million
Maintenance Facilities: $5-10 million
Administration and Accommodation: $5-10 million
Sources:
Golden Arrow Resources' Feasibility Study (2015)
Technical Reports and presentations
Industry research and analysis
La Jacinta Nueva Sabana Rail Connections to El Cobre.
Yes, ore from La Jacinta can be railed to El Cobre.
Railway Connection:
Line: Havana - Santiago de Cuba railway (mainline)
Branch Line: Jovellanos - Sancti Spíritus - El Cobre
Gauge: 1,435 mm (standard gauge)
Operator: Cuban Railways (Ferrocarriles de Cuba)
Distance and Travel Time:
La Jacinta - Jovellanos: 40 km (25 miles), 1-2 hours
Jovellanos - Sancti Spíritus: 120 km (75 miles), 4-6 hours
Sancti Spíritus - El Cobre: 220 km (137 miles), 6-8 hours
Total Distance: Approximately 380 km (236 miles)
Total Travel Time: 11-16 hours
Railway Conditions:
Condition: Fair to good
Traffic: Mixed (passenger and freight)
Speed: Average 30-50 km/h (19-31 mph)
Freight Capacity:
Coal, minerals, and general cargo
Potential for transporting gold ore or concentrates
Yes, there is a railway line connecting Nueva Sabana and El Cobre.
Railway Details:
Line: Sancti Spíritus - Santiago de Cuba railway
Gauge: 1,435 mm (standard gauge)
Length: Approximately 220 km (137 miles)
Operator: Cuban Railways (Ferrocarriles de Cuba)
Stations and Distances:
Nueva Sabana - 30 km (19 miles) to San Luis station
San Luis - 50 km (31 miles) to El Cobre station
El Cobre - 20 km (12 miles) to Santiago de Cuba
Railway Conditions:
Condition: Fair to good
Traffic: Mixed (passenger and freight)
Speed: Average 30-50 km/h (19-31 mph)
Freight Capacity:
Coal, minerals, and general cargo
Potential for transporting gold ore or concentrates
Upgrade Plans:
Ongoing rehabilitation and modernization efforts
Planned electrification and signaling upgrades
Sources:
Cuban Railways (Ferrocarriles de Cuba)
Ministry of Transportation (MITRANS)
Industry reports and research
Benefits:
Efficient transportation of ore or concentrates
Reduced transportation costs
Increased reliability and scheduling flexibility
Challenges:
Maintenance and upgrade requirements
Potential capacity constraints
Coordination with Cuban Railways and other stakeholders
Costing Comparison
Considering the estimated costs, railing and tolling the ore might be a more economical option.
Tolling Costs (Estimated):
Railway transportation: $10-20/tonne
Tolling fees (processing): $20-30/tonne
Total: $30-50/tonne
Comparison to Local Processing:
Local processing costs (estimated): $40-60/tonne (including capital and operating costs)
Savings by tolling: $10-20/tonne
Benefits of Tolling:
Reduced capital expenditures
Lower operating costs
Faster startup and revenue generation
Reduced environmental liabilities
Considerations:
Contractual agreements with tolling provider (El Cobre)
Quality control and monitoring
Potential impact on revenue due to tolling fees
Transportation and logistics risks
Break-Even Analysis:
Assuming:
200,000 tonnes/year production
$1,200/oz gold price
85% gold recovery
$30-50/tonne tolling costs
Break-even point: 3-5 years (depending on tolling costs and gold price)
Sensitivity Analysis:
Gold price: ±10% change affects break-even point by ±1-2 years
Tolling costs: ±10% change affects break-even point by ±0.5-1 year
Conclusion:
Tolling the ore to El Cobre might be a more economical option, considering the estimated costs. However, thorough negotiations with El Cobre and careful evaluation of contractual terms, quality control, and logistics are necessary.
The same scenario applies to El Pilar, with some variations.
El Pilar Specifics:
Ore Characteristics: Gold oxide ore, amenable to flotation and cyanidation
Production Rate: 150,000-200,000 tonnes/year
Grade: 2-3 g/t Au
Recovery: 85-90%
Tolling Costs (Estimated):
Railway transportation: $10-20/tonne
Tolling fees (processing): $25-35/tonne
Total: $35-55/tonne
Comparison to Local Processing:
Local processing costs (estimated): $50-70/tonne (including capital and operating costs)
Savings by tolling: $15-25/tonne
Benefits of Tolling:
Reduced capital expenditures
Lower operating costs
Faster startup and revenue generation
Reduced environmental liabilities
Considerations:
Contractual agreements with tolling provider (El Cobre)
Quality control and monitoring
Potential impact on revenue due to tolling fees
Transportation and logistics risks
Break-Even Analysis:
Assuming:
150,000 tonnes/year production
$1,200/oz gold price
85% gold recovery
$35-55/tonne tolling costs
Break-even point: 2-4 years (depending on tolling costs and gold price)
Sensitivity Analysis:
Gold price: ±10% change affects break-even point by ±1-2 years
Tolling costs: ±10% change affects break-even point by ±0.5-1 year
El Pilar vs. La Jacinta:
El Pilar's lower production rate reduces economies of scale
Similar ore characteristics and processing requirements
Tolling costs and savings similar to La Jacinta
Conclusion:
Tolling the ore from El Pilar to El Cobre is likely a more economical option, considering the estimated costs. However, thorough evaluations and negotiations are necessary.
Considering gold is currently $2700 usd an ounce what does this do to the metrics
With gold at $2,700/oz, the metrics change significantly:
El Pilar Break-Even Analysis (Updated):
Assuming:
150,000 tonnes/year production
$2,700/oz gold price
85% gold recovery
$35-55/tonne tolling costs
Break-even point: 1-2 years (depending on tolling costs)
La Jacinta Break-Even Analysis (Updated):
Assuming:
200,000 tonnes/year production
$2,700/oz gold price
85% gold recovery
$30-50/tonne tolling costs
Break-even point: 1-2 years (depending on tolling costs)
Sensitivity Analysis (Updated):
Gold price: ±10% change affects break-even point by ±0.5-1 year
Tolling costs: ±10% change affects break-even point by ±0.2-0.5 year
Cash Flow Analysis (Updated):
El Pilar:
Average annual revenue: $121.5 million (150,000 tonnes/year @ 2.5 g/t Au)
Average annual operating costs: $22.5 million (tolling, transportation, etc.)
Average annual cash flow: $99 million
La Jacinta:
Average annual revenue: $162 million (200,000 tonnes/year @ 2.5 g/t Au)
Average annual operating costs: $30 million (tolling, transportation, etc.)
Average annual cash flow: $132 million
NPV Analysis (Updated):
El Pilar:
NPV (5% discount rate): $441 million
IRR: 91%
La Jacinta:
NPV (5% discount rate): $631 million
IRR: 104%
Conclusion:
With gold at $2,700/oz, both El Pilar and La Jacinta projects become significantly more attractive:
Break-even points reduced to 1-2 years
Cash flows increase substantially
NPV and IRR improve dramatically
This updated analysis assumes tolling costs remain the same. If tolling costs decrease, the metrics will improve further.
AAU Price at posting:
0.5¢ Sentiment: None Disclosure: Held
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