Minera IRL (LON:MIRL, TSE: IRL) will focus on permitting for its Ollachea mine in Peru over the remainder of the year after completing its latest exploration programme under budget and ahead of schedule.
Minera drilled down to 1,234 metres at Ollachea, with the production size tunnel to be used in future to transport ore from the future mine to the plant site.
Mining of the tunnel was "highly successful" with ground conditions proving better than expected in the slate rock type which hosts the orebody, Minera said today.
The miner added it remains on track for Environmental Impact Assessment (NYSEMKT:EIA) approval in the second half of 2013, while archaeological clearance of the plant site was nearing completion at quarter end.
In Argentina, Minera added that negotiations are also well advanced to finance the development of Don Nicolas from Argentina-based sources of capital.
Don Nicolas is fully permitted and available for immediate development once project financing is in place.
Minera intends to develop Ollachea and Don Nicolas eventually to replace the declining Corihuarmi gold mine in Peru.
Production was down at Corihuarmi in the three months to March, as anticipated, due to lower grade ore.
First quarter results saw revenue drop 17% to US$9.2mln, which was based on gold sales of 5,660 ounces, a fall of 13%.
The company posted an average realised gold price of US$1,631/ounce, down 4% on the previous year.
Pre-tax profits came in at US$0.2mln, down 94%, with the company holding $6.5mln in cash at the end of March.
Courtnay Chamberlain, Minera's executive chairman, said that like many gold companies its shares had been hit by the market uncertainty and the recent volatility in the gold price, though he believes that the fundamentals remain favourable for a strong gold price going forward.
"Factors working in favour of a higher gold price include the continuing weakness in world economies and currencies, reducing mine production and higher operating costs, retail buying support in the Far East, particularly China and India, and continued Central Bank buying.
"In my view, the current gold price is a good gold price particularly in light of the projected low cost of production projected for both Ollachea and Don Nicolas.
"At both projects, the project economics demonstrated in the respective feasibility studies are robust using a base case gold price well below that currently prevailing."
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