The agreement potentially provides Cleveland access to another source of high-grade gold mineralisation, whilst providing Orinoco with a deeper understanding of their mineralisation and the potential for early-stage revenue.
An initial 500 tonne parcel is planned to be processed in the first quarter 2014 to allow both parties to assess the processes, outcomes and economics of the activity.
Should the outcomes of the initial parcel be positive, the agreement provides for further parcels of up to 4,000 tonnes per month on a 'participation interest' basis, where both parties share the gold production.
"This is a great outcome for both companies. Limited bulk sampling has shown that Orinoco's Goiás projects have potential to host significant gold grades; however, their gold-bearing mineralisation is "nuggetty" and difficult to quantify without extensive bulk processing," Cleveland managing director David Mendelawitz said.
He added Premier Mine is located within trucking distance of Orinoco's projects, giving Cleveland the potential for additional positive cash flow and access another source of high-grade gold, without altering the Premier Mine Plan.
"Orinoco recently processed a 200kg bulk sample taken from Cascavel. The sample was reported to have a head grade of 16g/t with 95% of the contained gold recovered by gravity at a grind size of 1mm. We are looking forward to processing the first 500-tonne parcel early next year," Mendelawitz noted.
Premier Gold Mine
Cleveland is in the process of achieving stable operations at its Premier Joint Venture Project as it nears completion of its transformation to an owner-operator business model.
The jaw crusher and hammer mill have been installed at the plant and are now undergoing commissioning while the new In-Line Leach Reactor (ILR) is expected to be on its way from Australian supplier Gekko Systems.
Cleveland's recently revised resource stands at 950,000 tonnes at 1.52 grams per tonne gold, or 46,400 ounces, comprising 18,900 ounces at 2.14 grams per tonne of Indicated Resource and 27,500 ounces at 1.29 grams per tonne of Inferred Resource.
Infill and exploration drilling on the down-dip and lateral extension of the mineralization will be conducted during the first stage mining operation, aimed at expanding the open cut mining area resource through the continued conversion of Inferred to Indicated resources, plus the inclusion of new resource tonnages.
The previously identified potential resources best suited for underground mining will be a secondary focus and delayed for future exploration programs.
The toll treatment deal with Orinoco Gold allows Cleveland Mining to leverage its existing processing plant at the Premier Gold Mine to generate additional cash flow.
Should the agreement proceed to processing parcels of 4,000 tonne per month, this will give Cleveland steady cash flow to supplement revenue from its own mine without altering its mine plan.
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