Continental Gold Inc. [CNL-TSX; CGOF-OTCQX] shares rallied Tuesday January 29 as investors reacted to a project update for the company’s Buritica gold mine in Colombia.
Continental shares jumped 20.6% to $2.17 on volume of over 3.0 million. The shares trade in a 52-week range of $1.76 and $4.01.
A 19.9%-owned affiliate of Newmont Mining Corp. [NEM-NYSE], Continental Gold is an advanced-stage exploration and development company with an extensive portfolio of wholly-owned gold projects in Colombia.
The 75,023-hectare Buritica property is Continental’s flagship asset. It contains several known areas of high-grade gold and silver mineralization, of base metal carbonate-style variably overprinted by texturally and chemically distinctive high-grade mineralization.
Mineral reserves on the property currently stand at 3.7 million ounces of gold, grading 8.4 g/t and 10.7 million ounces of silver, grading 243 g/t.
That material is expected to support an average annual production rate in the first five years of 282,000 ounces of gold at a life-of-mine at an all-in sustaining and construction cost of US$604 an ounce.
Production is scheduled to commence in early 2020, the company has said.
According to a February 2016 feasibility study, initial capital costs are pegged at US$389.2 million. Total project costs were estimated at between US$475 million and US$515 million.
In a January 28, 2019 press release, Continental said an updated mineral resource estimate for the project is progressing well and ahead of schedule.
The project remains on schedule for construction completion and first gold pour in the first half of 2020, the company said. Ramp-up to commercial production is anticipated approximately six months thereafter.
Underground development is nearly 55% complete with 7,864 metres of lateral development completed as of December 31, 2018.
If the current development rate persists, the company said it will complete the required pre-production development ahead of schedule. This would allow crews to start the Year 1 production development earlier, providing access to additional stope areas.
Meanwhile, the 110-kV powerline installation remains on schedule for completion in the third quarter of 2019.
“We are very pleased with Buritica’s progress to date,” said Continental Gold Chief Operating Officer Donald Gray. “Development advance performed by our miners continues to consistently exceed plan.”
However, development has not occurred without some recent problems.
In September 2018, a Continental mining engineer was fatally wounded after being attacked by armed individuals in the nearby town of Buritica. Another engineer ended up being treated in hospital.
According to a report by Reuters news service, an unnamed source from the police said the attack did not immediately appear to be connected with crime gangs or insurgents. The employees were shot at while traveling in a vehicle near the town in Antioquia province, the source told Reuters.