TM Editors' Note: This article discusses a microcap penny stock. Such stocks are very easily manipulated; do your own careful due diligence.
The following interview of Managing Director Mark Papendieck of Orinoco Gold was conducted by Peter Epstein, CFA, MBA over the week ended July 20th. Orinoco Gold is an interesting gold junior with a soon-to-be-producing mine in the Brazilian State of Goias. Without further ado, let's jump right into the interview.
Please describe Orinoco Gold (OGX:ASX) in a single paragraph.
Orinoco Gold (OGX:ASX) is an Australian listed, high-grade gold developer and explorer with a dominant land position in the Faina Greenstone Belt in the central Brazilian State of Goias. The Greenstone Belt has been under-explored, despite hosting a past producing high-grade gold mine (Sertão 250k oz production at 25 grams/ tonne gold, “Au,” now owned by Orinoco Gold). Due to the coarse nature of the gold occurrences in the belt, conventional sampling is difficult and costly. Orinoco is developing its high-grade, low-cost Cascavel Gold Mine, with first production from the gravity processing circuit expected in 1st quarter, 2016. The development of Cascavel is the first stage of turning the Company's Faina Goldfields project into a high-grade, multi-mine operation.
What makes the Cascavel project so exciting despite the lack of a JORC Mineral Resource report?
In the Faina Goldfields Project, Cascavel will be our maiden gold mine, scheduled for first quarter, 2016. It's an elongated mineralized belt in which Orinoco has recently made important discoveries including Cascavel (15 m @ 88g/t Au from underground sampling) and Tinteiro (17.5 m @ 1,293g/t silver,”Ag”). These discoveries illustrate the prospectively of Orinoco's tenements and the significant potential upside beyond the imminent production from Cascavel.
With Cascavel's development, with remaining cap-ex of a US$ 7 million, Orinoco is poised to demonstrate just how profitable the Greenstone Belt can be. The past producing Sertão Gold Mine, now owned by Orinoco, had a shallow oxide zone mined by Troy Resources in 2003. At the time it was the lowest cost gold mine in the world with cash costs of US$ 53 an ounce!
Regarding Cascavel, the mineralized structure that hosts the gold has been intercepted in widely spaced drilling over 1.5 km of strike and over 700 m down dip. The system remains open along strike and down dip, and additional gold lodes parallel to (above and below) the main zone have been discovered. These parallel gold lodes are not part of our initial mine plan. This is a large system!
The structurally controlled and geologically continuous nature of the gold vein system combined with the drilling and underground sampling completed at Cascavel would ordinarily allow for a JORC Mineral Resource. While drilling provides an effective measure of the geological continuity of the Cascavel veins, the coarse nature of the gold prevents a reliable grade estimation amenable for JORC purposes. Given the difficulty and expense of defining JORC compliant resources through drilling, the Company is of the view that establishing a low-cost gold operation, and rapidly growing it, is the best way to create shareholder value and mitigate risk.
