Petaquilla continues to advance Lomero-Poyatos gold project - Analyst Blog
May 20 2013 - 9:22AM
Zacks
By Steven Ralston, CFA
Last week, Petaquilla Minerals (Toronto:PTQ:
TO) and (OTC BB:PTQMF)
announced the latest step in the advancement of the Lomero-Poyatos
gold project in Spain, specifically that the construction of a mine
access ramp has begun.
The Lomero-Poyatos project is currently at the exploration stage
with an inferred mineral resource estimate based primarily on
historical drill-hole data of the 124 known drill holes. Completed
by Behre Dolbear in May 2012, the revised NI 43-101-compliant
report estimates an inferred resource of approximately 830,000
ounces Au and 17.3 ounces Ag (6.07 million tonnes at an average
grade of 4.25 g/t Au at a 1.0 g/t Au cut-off and 88.74 g/t Ag) in
an underground mining scenario at Lomero-Poyatos.
Thus far, Petaquilla has completed the first phase of twin drilling
of historical holes, and the ramp will allow for additional twin
drilling which also will contribute to upgrading the existing NI
43-101-compliant inferred resource estimate to the measured and
indicated categories. In addition, the ramp will permit the infill
drilling recommended by the NI
43-101 technical report, namely the drilling of holes at 50 meter
intervals along N-S lines 100 meters apart.
Petaquilla Minerals acquired a 100% interest in the Lomero-Poyatos
concessions through the acquisition of Iberian Resources in late
August 2011; the titling process was completed in November 2012.
Having secured the initial environmental permit to dewater the pit
and the submerged galleries, along with the Andalusian Autonomous
Government’s administrative authorization, Petaquilla has already
completed the construction of a project office building and
improved roads on the property.
Located in the Huelva Province of Spain, Lomero-Poyatos is
approximately 85 kilometers northwest of Seville and 60 kilometers
north of the major port of Huelva. The mining complex includes two
open pits (one at Lomero and the other at Poyatos) and a six level
underground mine with a central shaft between the open pits.
Lomero-Poyatos was mined continuously from 1905 to 1982 solely as a
sulphide (pyrite) mine. At least 2.6 million tonnes of massive
sulphide ore was mined for pyrite content, which was smelted to
manufacture sulfuric acid. Since then, several companies, including
the pyrite smelter, have investigated Lomero-Poyatos as a possible
gold-silver deposit and/or a base metal (copper-lead-zinc)
deposit.
Lomero-Poyatos contains two independent ore bodies (Lomero and
Poyatos) that form a single ore body at depth, over 800 meters in
strike. Initially, each ore body was opened to the surface by
small open pit mines. Later, in the twentieth century, a main shaft
and an underground mine complex with at least six levels that
intersected both ore bodies was developed. The underground mine has
been flooded for about 20 years.mPetaquilla has prepared for
dewatering the mine by conditioning a 300 meter deep tap through
which the water can be removed.
We reaffirm our Outperform rating; however, we are adjusting our
price target to reflect the recent dramatic and historic decline in
gold and silver prices during the last two months. Since our
valuation is based on a net present share value of attributable
reserves and resources, our price target is impacted by the lower
metal prices. Our adjusted target for the stock of Petaquilla
Minerals is $1.20.
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