Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Lachlan Star targets improved economics from gold processing at CMD in Chile

Lachlan Star (ASX: LSA) has the potential to maximise economic returns from low grade gold mineralisation that is currently mined as waste at its wholly owned CMD Gold Mine in Chile with the delivery of initial results of a large scale trial of run of mine dump leaching.

Managing director Declan Franzmann said the initial results of the tests are very encouraging.

“There is a large amount of gold mineralisation between 0.15g/t gold and our current mineral reserve cut-off grades of around 0.3g/t gold that is currently mined and sent to the waste dumps,” he said.

“If the final results of these tests indicate that this material is economic to process, the potential for the CMD Gold Mine to increase gold production is excellent, and to do so at reduced waste to ore ratios.”

Highlights from the trial include:

- 38% recovery after 38 days for uncrushed run of mine dump leach material grading 0.20 grams per tonne (g/t) gold and still leaching;
- 55% recovery after 45 days for two stage crushed material grading 0.20g/t gold and still leaching; and
- Low reagent consumption.

The cut-off grade for the current mineral reserve is between 0.30g/t and 0.34g/t gold depending on the deposit using a gold price of US$1250 per ounce, which is based on three stage crushing of the ore.

Importantly, the processing costs associated with run of mine dump leaching are materially lower than the current processing route, although with potentially lower recoveries, which may enable the cut-off grades for the mineral reserves to be reduced.

Lachlan’s strategy is likely to revolve around the run of mine dump leaching of the low grade material, and continuing to crush the above 0.30g/t gold mineralisation.

This strategy is employed by several gold companies with operations in Latin America, most notably by Canadian gold producer Argonaut Gold (TSX: AR) at its 1.7 million gold ounce El Castillo mine in Mexico.

Meanwhile, further drilling results from the CMD Gold Mine have returned highlights of 8 metres at 0.5% copper from 31 metres, and 130 metres at 0.52g/t gold from 39 metres, including 21 metres at 1.14g/t, from the Tres Perlas Deposit.

Best results from Toro Deposit are 61 metres at 0.56g/t gold from 120 metres, including 15 metres at 1.07g/t from 120 metres, and 9 metres at 1.98 g/t from 84 metres.

Franzmann said the drill results from both deposits demonstrate the existence of broad zones of lower grade mineralisation around higher grade zones.

“Our goal is to extract value from this mineralisation. The objective of this work and our exploration program is to increase tonnages stacked and to drive unit costs down,” he said.


Tres Perlas

Drilling has recently recommenced at the Tres Perlas Deposit to test for extensions of the mineralisation.

Gold mineralisation at Tres Perlas is up to 100 metres thick at a cut-off grade of 0.30g/t Au and contains an Indicated Resource of 252,000 ounces of gold and an Inferred Resource of 333,000 ounces of gold, both at 0.5g/t.

The mineralisation is open down dip to the east and sits beneath copper mineralisation that forms part of the extension of the copper deposit being mined at Teck Resources’ (TSX: TCK) adjacent Carmen de Andacollo mine.


Toro

Meanwhile, the Toro Deposit, located at the western side of the CMD Gold Mine tenements has been the focus of a detailed exploration program over the past four months aimed at upgrading and expanding the current Resource to support the development of a single large open pit.

The deposit has an Indicated Resource of 84,000 ounces of gold at 0.8g/t and an Inferred Resource of 188,000 ounces of gold at 0.7g/t.


Cashed Up

Lachlan had A$16.1 million cash at the end of the September quarter.