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

Patagonia Gold to move forward with Lomada de Levia gold project after securing permit

Patagonia Gold (AIM: PGD) has announced that State Secretariat of Mining of the Province of Santa Cruz in Argentina has approved the environmental impact study and issued the necessary permit for the proposed trial heap leach operation at the Lomada de Leiva gold project, allowing the company to move forward with its operations there.

Engineering design and procurement contracts are well advanced and the construction of the elution processing plant is set to begin in Q3. The construction of the pad, mining and loading of the trial heap leach is expected to be completed in Q4 and will be followed by the commencement of irrigation and processing. The construction of the main heap leach operation will kick off with production start-up in the second half of 2011.

The main heap leach operation at Lomada is expected to produce over 21,000 ounces of gold per year at a low cash cost of US$300 per ounce, for the minimum expected mine life of 7 years. Patagonia has said that the project has “considerable growth potential” with the conversion of the inferred resources by infill drilling and the development of additional resources.

The Lomada de Leiva project is contained within the La Paloma Group of concessions totalling 44 sq km (square kilometres) owned 100% by Patagonia Gold. These concessions were acquired in February 2007 from subsidiaries of Barrick Gold Corporation (NYSE, TSX: ABX)under an agreement which includes a back-in option clause on delineation of 2 Moz (million ounces) gold equivalent.

Other projects hosted by this mining district include Cerro Vanguardia with 4.4 Moz gold equivalent (AngloGold-Ashanti ), Cerro Negro with about 2.5 Moz gold equivalent (Andean Resources), Manantial Espejo with 1.2 Moz gold equivalent (Pan American Silver), San Jose with 1.99 Moz gold equivalent (Hochschild/Minera Andes) and Mina Martha with 22 Moz silver equivalent (Coeur D'Alene).

Previous exploration at Lomada de Levia returned grades of 5.33 g/t (grammes per tonne) gold over 11 metres, 5.45 g/t over 17 metres, 9.08 g/t gold over 17.6 metres, 3.13 g/t gold over 10 metres, 2.59 g/t gold over 12.45 metres and 5.21 g/t gold over 14.7 metres.

A drilling campaign by Patagonia reported intercepts including 18 metres at 6.87 g/t gold, 10 metres at 12.68 g/t gold and 36 metres at 4.78 g/t gold.

Disclosure: The author holds no positions in the company