Production commences at Mexico mine
Rose Petroleum plc (AIM: ROSE)
("Rose" or the "Company")
Production commences at high-grade gold-silver mine in Mexico
Rose Petroleum plc, the AIM-listed (Ticker: ROSE) natural resources company, is pleased to announce that production has commenced on schedule and budget at the high-grade gold-silver Mina Charay project in Mexico. The project is held through the Company's wholly owned subsidiary, Minerales VANE S.A. de C.V. ("MV"), which has a joint venture agreement (the "JV" or "Agreement") with Minera Pafex S.A. de C.V. ("Pafex"). The terms of the JV specify a 60:40 (MV:Pafex) profit split on production.
Highlights:
· Mining commenced on 18 December 2014 and operations will continue throughout the Christmas period
· Planned mining rate is scheduled to reach approximately 100 tonnes per day by the end of the first quarter 2015 with a forecast production cash cost of US$699 per ounce of gold equivalent or US$9.33 per ounce of silver equivalent
· Total resources at Mina Charay of 29,000 oz gold and 173,000 oz silver contained in 90,000 tonnes of ore based on in-house re-evaluation at current metals prices
· In-house estimate of mineable grade (including dilution) of 10 g/T (grams per tonne) gold and 60 g/T silver
· Projected minimum mine life of three years
The Mina Charay project is located near the town of Los Mochis in western Sinaloa, Mexico, on the Charay, Charay 2 and San Luis concessions. During 2004 and 2005, MV drilled 27 holes at the project under an earlier option agreement with Pafex. MV and Pafex entered into the current JV agreement in September 2014 under which MV is responsible for developing and mining the Mina Charay deposit and profits are split 60:40 (MV:Pafex). After entering into the JV agreement, MV immediately started development work and the application process for securing a blasting permit. Initial development work was carried out to open up the vein and mining operations commenced on 18 December 2014. Ore will be transported to MV's San Dieguito de Arriba Mill ("SDA") at Acaponeta in the State of Nayarit, will continue throughout the Christmas period. Mining and transportation of ore are being carried out by contractors under supervision of MV. Processing of the ore at our SDA Mill will commence in January 2015.
The Mina Charay Mine is projected to reach a production rate of 100 tonnes per day at a fully absorbed cash cost of US$699 per ounce of gold equivalent or US$9.33 per ounce of silver equivalent over the life of the mine based on gold and silver prices of US$1,200/oz and US$16/oz, respectively. It is forecast that full daily production will be reached by the end of the first quarter of 2015.
Group CEO Matthew Idiens commented: "I am very pleased we have commenced operations at the Mina Charay Mine, within the forecasted time and budget, which is testament to the hard work and commitment of our team in Mexico. The Mina Charay project is a high-grade deposit and the cash flows from operations will be used to help fund the significant operational activity that is currently going on in the Company."
Idiens added: "With respect to operations, on the mining side we are awaiting assay results on the core from the drilling at the TC porphyry copper project in New Mexico, USA. With Mina Charay expected to make a significant contribution in terms of cash flow soon, we expect to be able to drill the Tango porphyry moly and copper targets in Mexico in the coming months. On the oil & gas side, the drilling permit has been received for the 1-34 well in the Uinta Basin and drilling will commence imminently. We have also commenced completion operations at our 16-42 well in the Paradox Basin. Although the recent oil price decline has overshadowed a lot of what Rose has achieved as a group during 2014, with our low breakeven costs of below US$20 BOE in both the Uinta and Paradox Basins, we have much to look forward to, and be optimistic about, in the coming year. "
For further information, please contact:
Rose Petroleum Plc +44 (0) 20 7255 4590
Matthew Idiens, CEO
Allenby Capital (Nominated Adviser & Broker) +44 (0) 20 3328 5656 Jeremy Porter / Alex Price
Lionsgate Communications (Public Relations) +44 (0) 20 3697 1209 Jonathan Charles / Lynn Carratt
Background to Mina Charay
Mina Charay is known to contain multiple veins, including the Veta de la Mina del Padre. It is located in the long-established San Blas Mining District in a part of the Rio Fuerte Valley known as "The Buried Peaks" which represent the western most bedrock exposures of the Sierra Nevada Occidental Mountain Range.
In August 2004, MV entered into an option agreement with PAFEX to acquire the Mina Charay gold and silver prospect. The objective of the programme under the 2004 option agreement was to evaluate the property for a large disseminated gold deposit. The results of that programme did not confirm disseminated mineralization, but rather high-grade veins. The price of gold and silver at that time were approximately US$450/oz and $7/oz, respectively, and MV elected to withdraw from the agreement. However, high-grade veins have now become very attractive with the significant improvement in gold and silver prices.
During 2004 and 2005, MV completed a total of 27 diamond drill holes on the Mina Charay vein system varying in depth from 24 to 103 metres and averaging 58 metres. Inclined holes intersected the nearly vertical vein system in 19 of the 27 holes to provide 32 mineralized intercepts. Drilling tested the system over a strike length of some 240 metres. The deepest intercepts of the vein system are approximately 50 metres below surface. The drill hole assay results are tabulated below:
|
MINA CHARAY |
|
|||
|
DRILL HOLE INTERCEPTS |
|
|||
|
VEIN #1 |
|
|
|
|
|
|
True width |
|
|
|
|
Hole ID |
metres |
Au, g/T |
Ag, g/T |
|
|
1/1A |
1.0 |
26.0 |
290.1 |
|
|
2 |
0.8 |
10.1 |
30.9 |
|
|
3 |
0.5 |
3.7 |
49.7 |
|
|
4 |
2.3 |
6.1 |
69.9 |
|
|
7 |
2.6 |
8.8 |
65.0 |
|
|
8 |
2.1 |
20.4 |
70.4 |
|
|
16 |
1.9 |
11.3 |
235.3 |
|
|
17 |
1.0 |
15.0 |
347.8 |
|
|
18 |
0.8 |
16.0 |
76.9 |
|
|
18 |
2.0 |
42.3 |
39.8 |
|
|
20 |
0.7 |
3.4 |
168.0 |
|
|
21 |
3.4 |
3.9 |
96.1 |
|
|
22 |
3.1 |
14.5 |
34.6 |
|
|
23 |
1.4 |
16.7 |
72.8 |
|
|
24 |
0.8 |
5.1 |
51.4 |
|
|
25 |
1.0 |
43.4 |
77.5 |
|
|
VEIN #2 |
|
|
|
|
|
|
True width |
|
|
|
|
Hole ID |
metres |
Au, g/T |
Ag, g/T |
|
|
2 |
1.2 |
5.5 |
34.3 |
|
|
14 |
0.2 |
11.9 |
24 |
|
|
20 |
6.8 |
16.5 |
131.7 |
|
|
21 |
0.6 |
66.2 |
147.4 |
|
|
25 |
1.4 |
19.3 |
171.5 |
|
In 2005, MV contracted International Mining Consultants Inc. ("IMC") to complete an internal reserve estimate from its drill hole programme results. IMC calculated a reserve of 38,000 tonnes at a grade of 16 g/T Au and 100 g/T Ag, based on vein continuity across 16 of the 27 holes drilled, which contains 19,500 ounces of gold and 122,000 ounces of silver. MV recently re-evaluated the drill data internally given the substantially improved metals prices and a total resource estimate was determined as 55,000 tonnes at a grade of 16 g/T Au and 100 g/T Ag with an average vein thickness of 1.5m. In accounting for mining dilution, the resource estimate is 90,000 tonnes at the grade of 10 g/T Au and 60 g/T Ag, which would yield 29,000 ounces of gold and 173,000 ounces of silver during a mine life of three years. The previous drilling appeared to close off the mineralization along strike, but the potential for additional mineralization down-dip could yet be established.
The geology of the Mina Charay region and of the prospect itself is characterised by a thick section of volcanics of Tertiary age. Mina Charay occurs at the southwest foot of Cerro Del Mina, a conical hill composed of northwest dipping andesites. The southern flank of this hill is cut by a steep fault zone believed to be the same structure that controls mineralization at Mina Charay, particularly that of the strongly mineralized vein called Veta de la Mina del Padre. That fault extends into a zone of brecciated andesites and rhyolites, which are intensely silicified, fractured and cut by a stockwork of quartz veinlets with concentrations of gold and silver as well as geochemically anomalous values of lead, zinc, molybdenum and mercury. Other veins, known to occur in the immediate area, some parallel with the Veta de la Mina del Padre (Charay) vein, have not yet been explored and provide further exploration potential on the property.
Kristopher K. Hefton, BSc Geology, Chief Operating Officer Rose Petroleum plc, who meets the criteria of a qualified person under the AIM Rules - Note for Mining and Oil & Gas Companies, has reviewed and approved the technical information contained within this announcement.
About Rose Petroleum
Rose Petroleum plc (AIM Ticker: ROSE) is focusing on developing its oil & gas portfolio, while seeking to create value from its existing mining portfolio.
In March 2014, Rose signed a farm-in agreement under which its newly formed subsidiary, Rose Petroleum (Utah) LLC, can earn 75% of certain oil, gas and hydrocarbon leases covering approximately 230,000 net acres in Grand and Emery Counties, Utah, USA, within the Paradox and Uinta basins.
In May 2014, Rose published the results of its reserve report prepared by Ryder Scott Company on the Mancos and Paradox Oil & Gas Projects. Unrisked Prospective (Recoverable) Hydrocarbon Resources on a Best Case (P50 equivalent) basis for the collective total Mancos Shale and Paradox Formation combined was 1,452.86 MMBO (million barrels of oil) and 4,791.85 BCFG (billion cubic feet of gas).
In June 2014, the Company successfully raised £6.5m by way of an oversubscribed conditional placing and subscription to develop the Mancos and Paradox assets in Eastern Utah, and the completion of a further £3.5m fundraise was announced on 5 December 2014.
In October 2014, Rose acquired 100% of the assets of a privately owned SEP - Cisco Dome, LLC and various other associated entities. The acquired assets included 11,000.02 gross / 8,250.02 net acres of highly prospective Mancos acreage, a gas compression station and gas processing plant as well as 17 producing wells and 35 shut-in wells.
Management intends to build on these projects to establish a balanced international asset portfolio. For further information please consult the Company's website: www.rosepetroleum.com
This information is provided by RNS
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