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Orinoco Gold times run to first gold production at Cascavel, Brazil

Orinoco Gold (ASX:OGX) is continuing its drive to first gold production at its Cascavel gold mine in Brazil as mine development advances on schedule.

Stoping of first high-grade material will commence this month for the high grade, high margin project.

Intriguingly, abundant visible gold was observed in new samples collected during development for stoping.

This should see Orinoco resume its upward share price climb as its joins the ranks of international gold producers later this quarter.

Construction of Cascavel crushing circuit is now 85% complete while the factory-commissioned gravity circuit has arrived in Brazil and will soon clear customs.

While commissioning of the Cascavel Plant with lower grade development ore remains on track for this current quarter (Q1 2016).

The road to production was paved by a plan to raise up to $6 million to accelerate the planned mine development of its Brazilian gold assets, which will boost planned production by more than 50% in less than a year.

This will boost production at Cascavel from a planned start-up rate of 40,000tpa in the March quarter 2016, to more than 60,000tpa in the December quarter 2016.

Key shareholders have advised of their intention to take up their entitlements. There is also $1 million in commitments from a share placement to sophisticated and institutional investors.

Cascavel has yielded some stunning gold grades as high as 645g/t gold, with others including 3.66 metres at 142.62g/t gold, and 15 metres at 88g/t gold.

The capital raising will include a one-for-seven non-renounceable entitlement offer to shareholders at $0.17 with one free listed option for every three new shares subscribed, to raise up to A$5 million.

Analysis

The gold sector is as good a place to be right now and for Orinoco it is an opportune time to join the ranks of global gold producers. The high grade, high margin mining at Cascavel represents a small starter project but part of a low risk first production strategy.

The current funding drive will boost planned production by more than 50% in less than a year. But this is only the start, as Cascavel is a large gold system with multi million ounce potential within Orinoco's tenement holding.

We expect the share price, currently $0.17 (for a $33M market cap) is modest and should resume its upward climb as plant commissioning is successfully completed this quarter.

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