orinoco gold quality project.

FAST-TRACKING CASCAVEL TO
PRODUCTION AFTER ACQUIRING
THE SERTÃO GOLD MINE

OGX ACQUIRES TROY’S SERTAO GOLD MINE
Orinoco Gold Ltd (OGX) has announced it is acquiring 100% of the historic Sertao Gold Mine (and other surrounding Licences) from Troy Resources Ltd (TRY:ASX¦Not rated) which is situated just 20km from OGX’s flagship Cascavel Project in central Brazil. We see this as a smart and logical move for OGX at a nominal cost.

This acquisition may enable a fast-tracking approach to production at the Cascavel Gold Project. The long lead times often associated with exploration and development companies can be dramatically reduced since OGX now has a granted Mining Licence as part of the Sertao Mine acquisition. The Mining Licence at Sertao includes access to grid power, water, haul roads and relevant approvals for mining and processing.
OGX now has the ability, and an Extraction Licence in-place, to produce 50kt ore parcels from Cascavel which could then be processed through a gravity plant (with +90% recoveries) on the Sertao Mining Licence, which would require minimal capital expenditure.
Trucking distances are estimated at ~28km from Cascavel to the Sertao mine, which we believe to be a comfortable distance since the strong grades from Cascavel are estimated to be ~8.5 g/t Au and likely to carry the costs of transport.
While the orebody could support a +200ktpa operation, the Company may decide to mine a lower volume, dependent on results from the upcoming exploration decline and drilling. We estimate production of between 20kozs – 50kozs p.a at Cascavel under the current Extraction Licence, depending on grades and throughputs. This would operate until a full Mining Licence is granted at Cascavel, at which time OGX would move to full production.
The Sertao Gold Mine mineralisation is very similar in style to that of Cascavel. The grades are likely to be slightly higher than that of Cascavel, however the advantage of the Cascavel ore is the ability to use gravity only processes. Sertao was a very profitable open pit mine which produced >250kozs at an average grade of ~21 g/t Au (mine closure was in 2007). Average LOM C1 cash costs were OGX also has the opportunity to recommence mining at Sertao. The high grade vein remains open at the base of the pit and drilling done by TRY has confirmed the high grade extensions of the vein up to 750m from surface.
Upon completion of the capital raising, OGX will commence an exploration decline (estimated to begin in Mar’14) to further evaluate the coarse gold mineralisation at Cascavel. High grade ore is to be mined and further studies will be undertaken into the mineralisation, through underground mapping and drilling. OGX plan to infill drill the known high grade orebody to progress to a Maiden JORC Resource.



MAJOR SHAREHOLDERS
Trafford Resources Ltd John Hannaford
COMPANY DESCRIPTION
~$10M 60M
15% 6%
Orinoco Gold Ltd (formerly Strickland Resources Ltd) is a South American gold explorer/developer that owns 70% of the Faina Goldfields Project in central Brazil.

RECENT DEVELOPMENTS
Feb 2014

Acquisition of the historic Sertao Gold Mine from Troy Resources. OGX to issue 7m options, pay A$0.236m of TRY’s outstanding tax, and TRY holding a small royalty over the first 180kozs of production.
OGX raises $1.14 via a placement and announced a $3m entitlement issue. Terms were 10¢ a share with free 1 for 2 options.
Successful bulk sampling highlights high grade opportunity, with average grade of 8.5 g/t Au and high grades of 24.1 g/t Au.
www.canaccordgenuity.com

Sertao Gold Mine
Mining at the Sertao operation began in 2003, and finished in 2007. TRY produced ~280koz at 16.7 g/t Au over the five years from the Sertao plant. The mine was highly profitable with cash costs averaging only US$70/oz from 2003 – 2005. The ore was processed using a modular plant for which ~50% of the gold was extracted via gravity and the remainder through a standard CIL circuit. Average recoveries at Sertao were +90%.
Test work performed on the Cascavel ore has shown gravity only recoveries to be +90%. This should be a significant advantage for OGX since the ability to exclude a CIL circuit could reduce both upfront capex and opex substantially.

Exploration upside remains at Sertao with previous drilling by TRY intersecting 0.7m at 48.2 g/t Au and 0.33m at 119.6 g/t Au, 100m and 750m down dip of the extensions of the mined open pit resource. OGX will further evaluate the exploration potential at Sertao, however the main priority will remain on the pathway to production at Cascavel.