Amarillo Gold Corp.-Metallurgical Update: Studies Show Higher Than Expected Recoveries for the Posse Deposit, Mara Rosa Project
January 10 2011 - 7:42AM
Marketwired Canada
Amarillo Gold Corp. (TSX VENTURE:AGC) ("Amarillo" or the "Company") received the
latest update from the ongoing metallurgical studies being conducted on the
Posse Deposit which is part of the Amarillo's flagship Mara Rosa project in
Goias State, Brazil, four hours drive northwest of the nation's capital,
Brasilia.
In a news release dated August 2010, Amarillo reported that encouraging
metallurgical recoveries were obtained when the Mara Rosa telluride bearing ore
was oxidized before cyanidization. For the purpose of that study an expensive
chemical oxidant was employed. Amarillo subsequently commissioned Coffey Mining
to undertake further studies to investigate the optimal metallurgical pathway
for the deposit. The study is being led by Rod Smith, a renowned telluride
expert, with input from other members of their metallurgical team. The
laboratory work is being conducted at Ammtec, Perth, Australia. Frank Baker, a
metallurgist of over 30 years' experience, is the project leader for Amarillo
(see NR Oct 12, 2010).
Two composites representing the predominant ore types in the deposit (Main and
Hanging Wall) were compiled, with head grades from 1.24 to 1.59 g/t gold (around
the grade of the indicated and inferred resource at 0.5 g/t cut off (see Table 2
below). The material was ground to a P80 of 45 microns. The ore was pre-oxidized
by vigorous oxygen sparging and then treated by standard 24 hr cyanidization.
Six tests with pre-oxidation times varying from 6 hours to 72 hours were carried
out on each of the composites. A pre-oxidation of 12 hours followed by a 24 hour
cyanidization achieved a recovery of more than 93%. A full table of the results
is given below.
Frank Baker comments: "The results are encouraging as they indicate the ore
could be treated using conventional CIL tanks with the simple addition of a PMS
oxygen unit, for less than $1 million in additional CAPEX. Also, importantly, we
see that cyanide consumptions (+/-0.3 kg/t) and lime consumptions (+/-2.0 kg/t)
were moderate." He continued, "Given the high gold recovery rates, this appears
the best method for the Posse deposit."
Table 1: Summary of test results using pre-oxidation and differing cyanide
residence times.
----------------------------------------------------------------------------
P80 Pre-ox
Ore- (Micro- time Grade CN Lime
type metres) (hrs) pH (g/t) Au recovery after (%) (kg/t) (kg/t)
---------------------------
8 hrs 18 hrs 24 hrs 48 hrs
----------------------------------------------------------------------------
HW 45 0 10.0 1.59 53.3 63.5 66.7 78.0 0.21 0.42
----------------------------------------------------------------------------
HW 45 6 12.0 1.49 84.1 92.0 93.7 95.3 0.28 1.60
----------------------------------------------------------------------------
HW 45 12 12.0 1.42 90.6 92.5 93.4 94.4 0.21 1.78
----------------------------------------------------------------------------
HW 45 24 12.0 1.24 91.3 92.4 93.4 94.4 0.27 3.36
----------------------------------------------------------------------------
HW 45 72 12.0 1.29 91.4 93.4 94.4 95.3 0.26 3.16
----------------------------------------------------------------------------
HW 45 24 11.0 1.48 64.0 69.4 75.3 81.0 0.30 1.08
----------------------------------------------------------------------------
HW 53 24 12.0 1.57 75.8 85.1 87.5 93.6 0.20 1.64
----------------------------------------------------------------------------
HW 75 24 12.0 1.40 76.7 85.6 88.8 90.0 0.16 1.50
----------------------------------------------------------------------------
M 45 0 10.0 1.39 65.3 80.0 81.3 87.8 0.16 1.24
----------------------------------------------------------------------------
M 45 6 12.0 1.43 84.7 88.8 91.9 94.4 0.29 1.92
----------------------------------------------------------------------------
M 45 12 12.0 1.43 85.0 91.4 93.2 94.4 0.26 2.14
----------------------------------------------------------------------------
M 45 24 12.0 1.37 88.3 93.1 94.0 94.9 0.27 4.76
----------------------------------------------------------------------------
M 45 72 12.0 1.35 89.9 92.9 93.8 95.6 0.29 4.52
----------------------------------------------------------------------------
M 45 24 11.0 1.37 73.4 81.1 84.3 89.1 0.30 1.76
----------------------------------------------------------------------------
M 53 24 12.0 1.41 78.7 85.3 87.9 90.1 0.20 1.58
----------------------------------------------------------------------------
M 75 24 12.0 1.39 78.3 84.9 86.8 88.5 0.20 1.40
----------------------------------------------------------------------------
Further repeat tests on individual samples will be carried out to ensure that
the whole ore-body reacts similarly to this process route. Milling tests show
that the ore's Bond Index is low (13 kwh/t) so that the cost of fine milling
should not be excessive. The results will allow us to weigh the higher operating
cost involved with finer milling against any recovery differential gained within
the best matrix of residence times.
A Preliminary Economic Assessment (PEA) study completed by Caracle Creek
International (see NR Mar 3, 2008)indicated that the deposit is economically
viable at gold prices above $US600/ounce and that the project has an NPV-5% of
approximately $205m pre-tax at $1000/oz Au price levels. This economic study had
assumed baseline metallurgical recoveries of 80%. The sensitivity analysis that
accompanies the study suggested 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. Although this economic model will be upgraded in Pre-Feasibility
study (PFS), now underway, the effect of improving recoveries is likely to be
similarly significant, emphasizing the importance of this work.
The three drill rigs on the Mara Rosa project have re-starting drilling after
the Christmas break shut down. Prior to the break, 3640m of drilling of the
planned 7000m, had been completed.
The current drilling program is designed to move most of the material defined as
an inferred resource within the planned $1000/oz gold open pit (based on the May
2010 resource estimate), into indicated and measured resource categories. The
program was designed to maximize this conversion using the minimum amount of
drilling. Amarillo has commissioned the same parties, i.e. AMC (Australian
Mineral Consultants) and Hugo Hoogvliet, an independent consultant who completed
the most recent May 2010 NI 43-101 compliant Mara Rosa estimate, to compile the
new resource estimate at the completion of drilling. Both experts contributed to
and approved the final design of the drill program.
Table 2 below reflects the current Mara Rosa NI 43-101 compliant resource estimate.
Table 2. Posse Deposit resource estimate at a 0.5g/t gold cut-off.
----------------------------------------------------------------------
Cut-off Category Tonnes Grade (g/t) Contained Gold Oz
----------------------------------------------------------------------
0.5 g/t Indicated 12,453,000 1.62 650,000
----------------------------------------------------------------------
0.5 g/t Inferred 10,611,000 1.38 471,000
----------------------------------------------------------------------
Buddy Doyle, President and CEO of Amarillo, comments: "Understanding the
metallurgical characteristics is key to the successful mining of any deposit.
The body of metallurgic work completed to date clearly shows the Company will be
able to achieve higher gold recoveries than the conservative 80% recovery rate
used in the PEA. Future work will now focus on further optimization of the
metallurgy. The projected increase in recoveries to the circa 90% level , when
combined with the recent high gold prices (superior to those used in the PEA)
bode well for a successful conclusion to the PFS study, of which the current
drill and metallurgical programs are integral parts."
The qualified persons for this news release, as per the guidelines within NI
43-101, are Buddy Doyle, a geologist of 29 years experience and a member of the
Australian Institute of Mining and Metallurgy (AUSIMM) and Frank Baker, a
metallurgist with over 30 years experience and also a member of AUSIMM and the
IOM3.
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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