Amarillo Gold Corp. [AGC-TSXV, AGCBF-OTCQB] said Tuesday it believes the Pastinho gold deposit located at its Mara Rosa gold project in central Brazil has the potential to be a “game changer” for the company. It made the prediction in a press release containing its results for the third quarter ended September 20, 2021.
The 100%-owned Mara Rosa gold project covers 60,000 hectares of exploration permits and 2,600 hectares of mining permits in the state of Goias. The main accumulation of gold within the Mara Rosa project, also known as the Posse Deposit, occurs in two main zones, Posse North and Posse South.
The Posse Deposit was discovered in 1982 by a predecessor of BHP Billiton Ltd. [BHP-NYSE, BHPLF-OTCPK], via drilling and testing a panned gold-in-soil anomaly in an area mine actively by garimpeiros. BMP Billiton sank a shaft and undertook small scale mining of the oxide ore before forming a joint venture with Western Mining Ltd. in 1988.
It is estimated that 80,000 ounces of gold was extracted from Posse. Of that amount, 31,000 ounces was extracted by Western Mining using heap leaching and a 600 tonne-per-day CIL plant. In 1988, Western Mining Ltd. sold the deposit to Metallica Brasil Ltda. For US$1.5 million.
Amarillo purchased the Posse Deposit from Metallica in October, 2003 for US$450,000. The project carries a 1% NSR to BHP Billiton and a 1% NSR to Franco-Nevada Corp. [FNV-TSX, NYSE.]
With $32.3 million in cash on hand, the company is working to evaluate options for raising the balance of construction financing to build the Posse Gold Mine.
Once built, company says it is anticipated that Posse will produce 102,000 ounces of gold per year in its first four years, and have average annual gold production of 84,000 ounces, based on an initial mine life of 10 years. Average recoveries are expected to be 89.9% and the average strip ratio over the life of mine is anticipated to be 4.3.
In a September, 2021 news release, the company said Pastinho is a new primary gold deposit located approximately 3.5 kilometres north east of the Posse Gold Deposit. “We have defined near surface gold mineralization over potentially mineable widths for a strike length of 1.7 kilometres and to depths of more than 100 metres,” the company said.
At the time, the company said 3,767 metres of diamond drilling, consisting of 23 holes, have been completed a Pastinho. Of the 23 holes completed, the company said assay results have been received for 15 holes spanning a strike length of 1,200 metres.
Drilling highlights include hole 21N016, which returned 6.0 metres of grade 1.57 g/t gold from 42 metres.
“We expect the deposit to develop into another source of future ore feed for the Posse mill,” said Amarillo CEO Mike Mutchler. “We believe Pastinho will extend Posse’s overall mine life and significantly increase the mine’s average annual gold production, thus enhancing the economics shown by the positive feasibility study.’’
Amarillo Gold shares were unchanged on Tuesday and trade in a 52-week range of 37 cents and 20 cents.