Resource World Magazine

42 www.resourceworld.com F E B R U A R Y / M A R C H 2 0 1 4 More Peruvian gold pro- cessing plants planned With revenues generated by its gold and silver processing plant in Peru, Dynacor Gold Mines Inc. [DNG-TSX] has been able to fund its exploration activities without the usual private placements most mineral explorers need to arrange. The company owns and operates a 230 tonne-per-day (tpd) gold and silver ore processing mill at Huanca, southern Peru. Government-approved miners ship their ore to Dynacor's plant for processing. For Q3 2013, the company recorded gold sales of 20,598 oz. Gold and silver sales totaled $28.1 million in the quarter as com - pared to $29.3 million in Q3 2012, a 4.1% decrease compared to Q3-2012 due to lower average gold price. Net income was $3.0 mil- lion ($0.08 per share) compared to $2.8 million ($0.08 per share) in Q3-2012. Dynacor is also building a new 300 tpd mill at Chala, southern Peru. Located 610 km south of Lima in the heart of one of the most productive mining regions of Peru, Chala is hooked up to the Peruvian national power grid and is located on the Pan American Highway. On the exploration front, Dynacor recently reported underground drill results from the Manto Dorado structure at its advanced-stage Tumipampa Project at Abancay, 500 km from Lima. Drilling inter - sected high gold and copper grades over 1.1 metres grading 115.7 g/t gold, 0.52 oz/ton silver and 3.03% copper and sampling in the drift (tunnel) returned grades of 27.83 g/t gold, 0.40 oz/ton silver and 1.69% copper over a length of 26.0 metres and a width of 1.5 metres. Dynacor isn't the only company interested in processing Peruvian gold and silver ores. The Peruvian government wants to crack down on illegal mining and processing activities by miners that pay no income tax, contribute to environmental destruction and are responsible for social conflict. New regulations require that informal artisanal miners register with authorities by April 2014. Rather than do this, some informal miners would prefer to sell their processing plants to companies that can upgrade them to meet gov - ernment standards. Jorge Merino, Peruvian Minister of Energy and Mines, said, "Peru has reached the point of no return in the fight against illegal mining." Inca One Resources Corp. [IO-TSXV] is also pouring gold at its refurbished 25 tpd Chala One processing facility in the Arequipa area 620 km south of Lima that it acquired in 2013. During November 2013, the mill processed 205 dry metric tonnes of ore grading 16.94 g/t gold with recoveries of 92.6% for gold production of 111.5 ounces. Upgrades are under way to increase throughput to 50 tpd by Q2 2014. Plans call for acquiring and upgrading five toll milling plants in Peru over the next five years for a total processing capability of 1,000 tpd. In a related development, Orovero Resources Corp. [OVR- TSXV; GA0-FSE] and Inca One signed a letter of intent to partner in acquiring an ore processing facility. Orovero will provide the fund - ing for an 80% interest while Inca One will provide the expertise and have an option to acquire a 20% interest in the mill. Edward Kelly, President and CEO of Inca One, said, "After selecting, acquir- ing, expanding, refurbishing and commissioning our first mill, on time and on budget, we feel confident that we can be of great benefit to our partnership." The partners are now seeking to acquire a suitable 50-75 tpd facil- ity that can be expanded to 125 tpd. The plan would be to then acquire up to four other suitable processing facilities in Peru, each with an optimal processing capacity of 125 tpd. Cash flows would be used to expand production of existing plants to the legal capac- ity of 350 tpd. For a 50 tpd processing facility, the revenue model is as follows: at a recovery rate of 95% and an average grade of 0.7 oz/ton, operating revenue/ton would be $240 with operating costs of $95/ton at a gold price of US $1,285/oz. n . Dynacor Gold's Acari mill at Huanca, southern Peru. Photo courtesy Dynacor Gold Mines Inc.

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