Amarillo Gold Corp.: Positive Metallurgical Results Indicated for Posse Deposit-Tenders Furore-Feasibility Study Underway
August 11 2010 - 11:53AM
Marketwired Canada
Amarillo Gold Corp. (TSX VENTURE:AGC) ("Amarillo" or the "Company") received an
update on the metallurgical studies conducted for the Posse Deposit, part of the
Mara Rosa project in the northern Goias State, Brazil.
Amarillo recently released an updated resource estimate at Posse and this
estimate as summarized in table 1.
Table 1. Posse Deposit resource estimate using 0.5g/t gold cut-off.(i)
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Cut-off Category Tonnes Grade Contained Gold Oz
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0.5 g/t Indicated 12,453,000 1.62 650,000
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Inferred 10,611,000 1.38 471,000
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(i) NI 43-101 compliant estimate by Keith Whitehouse of AMC and Hugo
Hoogvliet, independent consultant.
There had been a moderate-sized body of work on Posse's gold metallurgy
completed before the most recent tests were commissioned. The Posse mine was
operated in the mid-1990's and employed a minus 80 mesh grind, followed by whole
ore cyanide leaching in the presence of bubbled air and carbon. Based on mine
records, the average gold head grade was about 3.0 g/t and the cut-off grade was
2 g/t. The recovery achieved was 85% and a roughly linear decrease in recovery
with grade was observed. A Barrick Gold document written in the late 1990's
detailed a variety tests completed by a variety of persons and companies; the
results of these tests were not always mutually consistent, but a common theme
was that basic cyanide bottle rolls gave poor recoveries (40-60%). More
recently, in 2008, Amarillo sent drill pulps, milled to 75 microns, to
FUNMINERAL, the Goias State mining entity, which reported basic cyanide bottle
roll recoveries of between 68% and 91%, averaging 84%. It is now thought that
these relatively high recoveries where achieved due to weak oxidation of the
sample, after exposure to air and time. There is a general consensus that while
about 50% of the gold at Posse comes in native form, the rest of the gold is
associated with a telluride complex, and that this fraction is at least weakly
refractory. However, it is thought that this refractory gold complex can be
liberated by moderate oxidation.
The Company commissioned Testwork Desenvolvimento de Processo Ltda ("Testworks")
to further study the metallurgy of the deposit. Testwork's facilities are
located in Nova Lima; its previous clients include AngloGold Ashanti's Cuiaba
mine, Serra Grande's (AGA-Kinross JV) Crixas mine and ASX listed Mundo Minerals'
Engenho mine.
Testworks were to have delivered results in early 2010, however, they
encountered a series of inconsistent results that caused delays. Amarillo
commissioned Coffey Ltd. in April 2010 to act as our metallurgical consultant to
help understand the problem and guide the metallurgical tests to conclusion.
Coffey are International mining engineering consultants with a Brazilian
presence. The subsequent investigation determined that poor sample
homogenization explained the inconsistent results. All sub-samples were
therefore recombined, mixed and re-sampled and the inconsistency was eliminated.
Amarillo, Coffey and Testworks then designed some key tests to bring this stage
of work to an expedited conclusion.
The highlight of the subsequent work is that while basic cyanide bottle rolls
yielded poor recoveries (40-60%), high gold recoveries are achieved by
chemically oxidizing the telluride component of the sulphide gold
mineralization. For example, a recovery of 92.2% to 92.6% was achieved on a
1.46g/t Au sample by pre-oxidizing a sample with calcium hypochlorite followed
by bottle roll cyanide leaching. Fine milling of a 1.14 g/t Au sample subject to
the same method achieved 97.3% recoveries.
Another test conducted on a sample grading 1.14 g/t Au yielded an 83.7% recovery
by using flotation methods. The flotation concentrate was then pre-oxidized
using calcium hypochlorite followed by cyanide leaching to yield a recovery of
96.4%. The flotation tails were then cyanide leached resulting in a recovery of
53.5% and a consequent global recovery of 89.4%. Coffey considers an enhanced
variation of this last test will likely deliver the least capital intensive
metallurgical circuit with highest gold recoveries.
A working theory Coffey favors is a selective flotation process that separates
the telluride fraction from the other sulphide minerals. The small volume
telluride concentrate would then be subjected to ultra-fine milling and injected
air for purposes of oxidization (Albion Process); alternatively, a chemical
oxidant could be used. After the pre-oxidization, the telluride concentrate
would be cyanide leached. The sulphide concentrate would also be treated by
cyanide in separate tanks. The flotation concentrates are at a maximum 5% of the
mineralization by weight. Therefore, significant capital and operating cost
savings on vessel size and chemical consumption respectively may be achieved by
treating only these concentrates. Further tests have been recommended to refine
and optimize this metallurgical process route.
Linton Kirk of Coffey said, "Based on the current and historical test work on
the Mara Rosa project and the development of new technology for processing of
refractory gold mineralization's, it is Coffey's opinion that the mid to low
grade Posse ore could be treated successfully with potential recoveries in the
order of 85% to 90%."
Preliminary Economic Assessment (PEA) studies indicate that the deposit is
economically viable at gold prices above $US600/ounce and that the project has
an NPV-5% of approximately $150m pre-tax at $1000/oz Au price levels. These
economic studies have assumed baseline metallurgical recoveries of 80%. The
sensitivity analysis that accompanies these economic studies suggests that for
each 1% change in metallurgical recoveries, the NPV-5% changes by approximately
$6m at $1000/oz Au and by $10m at $1500/oz Au.
Amarillo management is encouraged by these results and has decided to commence a
pre-feasibility study which would incorporate the continuing metallurgical
studies.
To this effect the company has circulated pre-feasibility tender documents to
several engineering consulting firms. The successful tender(s) will be announced
when the selection(s) have been made.
The qualified person for this news release, as per the guidelines within NI
43-101, is Buddy Doyle, a geologist of 29 years experience and a member of the
Australian Institute of Mining and Metallurgy.
ABOUT AMARILLO:-
Amarillo Gold Corp. is a company focused on the acquisition, definition and
discovery of gold resources in Brazil. Its principal projects are the Mara Rosa
project in the state of Goias and the Lavras do Sul project in the state of Rio
Grande do Sul. The Posse Deposit at Mara Rosa was found by an independent 43-101
compliant preliminary economic assessment study carried out by Whitehouse and
Hoogvliet to contain 650,000 ounces indicated from 12.4MTonnes @ 1.62 g/t Au,
471,000 ounces inferred from 13.8MTonnes @ 1.38 g/t Au at a 0.5g/t cut-off grade
and the project is in the economic evaluation stage. The Posse deposit is
located in an area of excellent infrastructure located some 35 km NE of Yamana's
Chapada open pit Cu-Au operation, 105 km NE of Serra Grande's underground Au
mine, 105 km NNW of Anglo American's nickel laterite project (in construction),
95 km NW of Votarintim's Niquelandia nickel laterite mine and approximately 60
kms NE of Yamana's Pilar Au project (in feasibility). Grid power to the site was
established during the previous open pit mining operation and the Serra da Mesa
hydro-electric dam lies 35 km to the east. A new railroad is being constructed
with 1.6km of the project.
The Lavras do Sul project is in the advanced exploration stage with over 15,000m
of drilling with encouraging gold mineralization being discovered and defined,
also in an area of excellent infrastructure. The Company also has a portfolio of
earlier stage projects. All properties under Amarillo's management are located
in areas of good infrastructure and robust community support.
ON BEHALF OF THE BOARD OF DIRECTORS
AMARILLO GOLD CORP.
Buddy Doyle, President
FORWARD LOOKING STATEMENTS:-
This news release contains Forward Looking Statements regarding our intentions
and plans. Various factors may prevent or delay our plans, including but not
limited to, contractor availability and performance, weather, access, mineral
prices and success and failure of the exploration and development carried out at
various stages of the program. Readers should review risk factors applicable to
junior mining exploration companies generally to understand the variety of risks
that can affect the Company.
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