Special Report: Later this month, drilling will recommence at Equus Mining’s (ASX:EQE) high-grade, development-ready Cerro Bayo silver-gold project in southern Chile.
Under its binding deal with TSX-listed miner Mandalay Resources announced last year, Equus can choose to acquire all the Cerro Bayo mining properties, resources, and mine infrastructure at any time over the next three years.
That includes the 1,500-tonne-per-day Cerro Bayo processing plant, currently on care and maintenance.
The Cerro Bayo project has been through several production phases over the years.
The nine historical mines within the Cerro Bayo project area have been significant high-grade operations, with production to date of ~650,00oz gold and 45 million ounces of silver.
Equus – which believes there’s a lot more silver and gold to be discovered — has a ‘dual-track’ development strategy for Cerro Bayo.
One, explore the numerous exciting ‘greenfields’ gold and silver targets while two, re-evaluating the existing brownfields resources close to the Cerro Bayo processing plant.
Drilling blitz
Stage two of Equus’ greenfields (untouched or underexplored) diamond drilling program is scheduled to kick off in late August.
The planned 1,500m program will target more gold and silver beneath and along strike from previously reported high-grade intercepts at the Droughtmaster prospect.
Highlights from previous drilling at Droughtmaster includes 1.06m grading 62.58 grams per tonne (g/t) gold and 129.3g/t silver.
Equus is also finalising a number of high potential brownfields (previously mined or explored) drill targets, ‘along trend’ of several key historic producing mines.
More detail on drill targets will be released in coming weeks, the company says.
Near-term silver and gold production
Equus has engaged Cube Consulting to undertake a JORC 2012 compliant resource (a must-have for ASX-listed miners and explorers) for the Taitao pit and adjacent greenfields mineralisation.
The Taitao pit was mined between 1995 and mid-2000 when the gold price averaged ~US$300/oz and silver ~US$5/oz.
Current prices, paired with its proximity to the processing plant, makes Taitao a compelling opportunity for Equus to become a profitable near-term gold and silver producer.
In the last quarter, Equus completed 1,385m of diamond drilling at NE and Central Taitao, with better results including 19m at 1.26g/t gold and 10g/t silver from 68.5m.
This resource update is scheduled to be completed in the current quarter and will form the basis of a project re-start study — expected to be completed by the end of 2020.
Plant restart gives Equus a ’free look’
Current owner Mandalay Resources has now decided to resume production at Cerro Bayo to take advantage of booming gold and silver prices.
Mandalay plans to commence processing of low-grade stockpiles in early Q4 2020 at an initial rate of 40,000 tonnes per month.
This gives Equus a ‘free look’ at the plant in operation and, given it can take over the operations at any time, could transform this $24m market cap explorer into a low-cost, low-risk near-term producer with plenty of upside.