Latin American gold miner Minera IRL (LON:MIRL TSX:IRL) is set to begin drilling on January 2 of next year on the eastern extensions of the Ollachea ore bodies.
The company has awarded a diamond drilling contract for a minimum of 4,000 metres (m) of drilling to Ingetrol Peru, a company which is already providing surface drilling services to Minera IRL.
The 1,200m exploration drive at Ollachea is scheduled to reach 1,000m by early January, which should provide excellent positioning for exploration drilling of the eastern extension of the Minapampa ore body, where Minera IRL has just completed a feasibility study.
The company said good progress has been made with the exploration ground, thanks in part to ground conditions being a lot better than expected. Water in-flow has been low, the company added.
The rate of progress picked up considerably during October and November.
Mining has passed through the major regional lineament, the Ollachea thrust fault, and is now within the late rock package, which is where the gold mineralisation is.
"The tunnel, which is approximately 250 metres below the outcrop at Minapampa, will also place us in an ideal position to explore the down-dip extension of Minapampa as the tunnel advances," said Courtney Chamberlain, Executive Chairman of Minera IRL.
"The defined mineralisation remains open ended and untested along strike and down-dip," he added.
House broker finnCap thinks the underground drilling campaign could add considerable value to the project.
The broker currently ascribes no value in its valuation model to any resource that may be discovered in the current exploration drilling campaign, which is due to start in the near future.
"This is in spite of the fact that it is known that the mineralisation extends considerably to the east as it has been continuously mined at outcrop in the bottom of the valley," notes finnCap analyst Martin Potts..
finnCap has a target price of 109.1p for the stock.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.