Vancouver, February 17, 2015 – Luna Gold Corp. (TSX-LGC, LMA-LGC, OTCQX-LGCUF, “Luna” or the “Company”) provides an update on operation and corporate activities.
Operation Update
The Company has commenced the process of suspending mining operations at Aurizona by February 15. On completion of mining operations, the ore stockpile will have approximately 470,000 tonnes of mixed soft and hard saprolite ore with an average head grade of 1.12 grams per tonne and 390,000 tonnes of transitional ore with an average head grade of 1.06 grams per tonne. The ore will initially be blended at a ratio of 80% mixed saprolite ore to 20% transitional ore for feeding to the plant. The Company expects to process approximately 860,000 tonnes of ore grading approximately 1.10 grams per tonne over the next five months.
Cutbacks in mine site personnel are underway to better align the remaining workforce for processing stockpiled ore at the plant and associated activities. Employees at Aurizona will have been reduced from approximately 900 at mid-2014 to approximately 390 on halting of mining operations.
As disclosed in the Company’s third quarter 2014 results news release (11-13-14), in an effort to conserve capital, all non-essential capital programs were halted, including the tailings dam raise. The tailings facility currently has an estimated available capacity of 900,000 tonnes of tailings before reaching maximum safe containment. The Company expects this capacity will be sufficient to contain the tailings from the stockpiled ore to be processed over the next five months. A tailings dam raise from 29.5 metres to 31.6 metres has been permitted and the estimated cost to complete this raise is approximately US$6 million. This raise will be required to increase the available storage volume to process ore beyond the current available limit. This construction can only take place in the dry season from July – December. The Company will require additional capital to complete such construction going forward.
Work has continued on the Aurizona reserve study over the past several months, including the relogging of over 61,000 metres of core. The relogging has resulted in a new geologic model, including reinterpretation of geology, alteration, oxidation, structure and ore hardness. The classification of ore hardness is of particular importance to determine optimum saprolite (soft) ore feed for the current plant design. This new hardness data has identified two types of saprolite ore; 1) soft – which is suitable for processing in the existing plant and 2) hard – which behaves more like transitional/primary ore which requires crushing and grinding. This information will result in a re- classification of the remaining ore at Piaba into 1) soft saprolite, 2) hard saprolite, 3) transitional and 4) primary. This reclassification has materially reduced the amount of remaining saprolite ore that can be processed through the existing plant. Further technical information and work is required to determine the process plant requirements needed to successfully process the majority of the ore body, specifically related to crush and grind requirements.
Management will focus over the next months on the development of an updated NI 43-101 technical report to provide a mineral reserve estimate based on the new geological model and updated project parameters. In the interim, given the suspension of mining operations and the need of additional capital to restart economical mining activities, the Company’s existing mineral reserve estimates (effective as of January 29, 2013) contained in its public disclosure and in its last technical report are no longer considered current and should therefore not be relied upon.
Corporate Update
The strategic review process continues with Canaccord Genuity acting as the Company’s advisor. The Company has received indicative term sheets which are subject to further due diligence work at the Aurizona operation and the acceptance of an amended stream agreement by Sandstorm Gold Ltd. Site visits will continue over the next several weeks. However, there can be no assurance that the strategic review process or the indicative term sheets will result in any transaction.
As disclosed in our Management’s Discussion and Analysis for the third quarter ended September 30, 2014, the Company is not in compliance with certain covenants in its Corporate Secured Revolving Facility. Management continues to consult with its lenders.
Q4 and Full Year 2014 Results Conference Call
Luna will release its financial results for the three-month and full year ending December 31, 2014 (“Fourth Quarter 2014”) at 7:00 a.m. Eastern Time on Monday, March 16, 2015.
Luna’s Fourth Quarter 2014 financial statements, and Management’s Discussion and Analysis will be available on Luna’s website, www.lunagold.com, and www.sedar.com |
