August 30, 2012Marengo Mining's Feasibility Study For Yandera...

August 30, 2012
Marengo Mining's Feasibility Study For Yandera Will Be Complete By Christmas, Incorporating Very Strong Recent Drill Results
By Ryan Jackson
Before Marengo Mining arrived on the scene seven years ago, the Yandera project in Papua New Guinea changed hands between major miners several times. Work had been ongoing on the project in some fashion since back in 1965, meaning that when Marengo arrived there was a significant cache of historical work to build on. Even so, the company wasn’t shy about getting on with its own programme.

Camp at Yandera
Marengo’s more recent data will shortly be combined with the old, in a feasibility study expected by Christmas. The plan is to initiate development soon after.
 
Following 40,000 metres of diamond drilling, the measured and indicated resource of now rings in at 486 million tonnes of material grading 0.37% copper, for 3.96 billion pounds of contained copper. 
 
Additionally, there is an inferred resource of 347 million tonnes of material grading 0.31% copper, for 2.37 billion pounds of contained copper. While copper is the principal metal at Yandera, the porphyry system also holds measured and indicated resources of 1.1 million ounces of gold and 140 million pounds of molybdenum.  
 
That resource was last updated in May, but a good deal more drilling has been conducted since the cut-off date of December 31st 2011, and managing director Les Emery is confident that the next update will be positive.
 
“Good old Yandera continues to throw out good news for us, as it has done for all the time we’ve been there”, he says.
 
Recent drilling has been particularly encouraging. “Numbers such as 186 metres at 0.8% copper and nearly 1,500 parts per million (ppm) molybdenum from 42 metres below surface and 126 metres at 0.92% copper and 700 ppm molybdenum from 30 metres are exceptional even for the Yandera project”, says Les. “When you’re drilling these large deposits and you start infilling you get a better handle on grade.” 
 
As it turns out the handle Marengo has got is attached to a wheelbarrow full of copper and molybdenum, which should be added to the resource estimate in short order:  “We’re talking weeks, certainly not months, and that needs to be fed into mine planning.”
 
So just how significant are the new results in the grand scheme of things?  Even Les is not quite sure yet. “We’re still trying to assess the full value of them but certainly when you look at intercepts of that quality they will have some material impact on our numbers and also on our mine planning, particularly within our feasibility study in the scheduling of which deposits are mined in what order, and at what rate.” 
 
But we probably won’t have too long to wait for the final conclusion. “The study is going really well and the majority of the components of the study are complete or near complete, says Les. “We’re plus 90 per cent in most areas if not complete.” 
 
As part of the overall study the mine plan is nearing completion. But with all the extra data which has been generated from infill drilling in the first half of 2012, some work does still remain to be done. 
 
“The mine plan is really the crux of the study”, says Les. “It will tell us what material we will mine at any point in the projected mine life and the grades. From that, it will tell us what the reserves are.” 
 
All told, though, Les expects the results of the feasibility study should be published “well before Christmas.” First production is currently slated for 2016.
 
On another front, Marengo has secured an agreement for shipping facilities to service the Yandera project. Yandera’s geography has always been one of its key attractions. Situated only 95 kilometres southwest of the northern deep water seaport of Madang, the shipping of Yandera concentrate to resource-hungry China is an integral component of the plan.
 
Previously Marengo was looking at constructing new shipping facilities for the project, but now the company has been able to acquire existing facilities, including loading equipment that can be adapted for loading concentrate.  
 
“The development strategy is to have our processing at the mine site and to send copper concentrate down by pipeline to a coastal area”, says Les. “We had looked at constructing a port of our own and were given an opportunity to acquire existing facilities. For us, in terms of capital expenditure, it is good savings.” 
 
The land package is centrally located in town and covers a massive 18 hectares. That’ll be enough room for Marengo mining to use for all of its off mine site infrastructure, including concentrate storage facilities, shipping facilities, warehouses, offices, accommodations, and a power plant, which will run principally on liquefied natural gas and transmit power to the mine site for mining and milling operations. 
 
From there, the concentrate will be bound for a company which has been involved with Marengo since 2010 - China Nonferrous (NFC), one of the largest state-owned construction and engineering groups in China. 
 
“In our situation”, says Les, “we were looking for a position where we could maintain control of the asset while having someone provide finance for the US$1.8 billion to US$2 billion project as well as construction expertise. The deal we struck is the first of its kind to be done in China. It means they take no equity interest in the project, they take no equity interest in the company at this point. They will provide us with a fixed price contract to construct the project, and they will also provide us with finance through the Chinese banking system.”
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