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.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Amarillo Gold Corp. Buddy Doyle President + 1-604-689
1799 (Canada) +55-31-3261 5974 (Brazil) info@amarillogold.com
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